PRIVATE BUSINESS

Transas Group Bill

Order for Second Reading read.
	To be read a Second time on Wednesday 12 February.

Oral Answers to Questions

NORTHERN IRELAND

The Secretary of State was asked—

Northern Ireland Assembly

John Robertson: If he will make a statement on the recent discussions he has held with Northern Ireland political parties on re-establishing the Northern Ireland Assembly.

Paul Murphy: Intensive discussions are in progress, aimed at restoring the full operation of the devolved institutions and at the continuing implementation of the Belfast agreement. They involve the political parties in Northern Ireland and both Governments, including the Prime Minister and the Taoiseach, who will visit Northern Ireland on 12 February. It is essential that we restore the institutions on a stable basis, founded on the use of exclusively peaceful means.

John Robertson: I am sure that my right hon. Friend will agree that the breakdown in trust and confidence that led to the suspension of the Assembly needs to be repaired to ensure that devolution is re-established. Does he also agree that Northern Ireland wants devolution to be restored? How will he ensure that all the political parties can be consulted during the process and achieve devolution?

Paul Murphy: My hon. Friend is entirely right. I do believe that people in Northern Ireland want the institutions to be restored. I believe that devolution has been a success there, and the sooner I can ensure that my responsibilities for health, education and all the other matters that were devolved to the Northern Ireland Assembly and Executive are returned, the better.
	My hon. Friend is also right that it is important for everyone in Northern Ireland, nationalist or Unionist, to have trust and confidence in each other and in the institutions.

David Trimble: The Secretary of State will recall the Prime Minister's visit to Belfast in October, when he called for acts of completion on the part of paramilitaries, that being a euphemism for the complete cessation of all activity by the IRA and, effectively, the IRA's winding itself up. Will the Secretary of State assure us that, in their discussions with the republican movement, the Government are pressing for genuine acts of completion? Given the length of time for which the discussions have been going on, lest it turn out that the republicans are unable or unwilling to deliver the acts of completion that the Government require, are the Government thinking of having a plan B?

Paul Murphy: We must concentrate on what we are doing now—on plan A—before considering any other plans. As the right hon. Gentleman knows, what is important is ensuring a complete cessation of paramilitary activity that is real, total and permanent. All our efforts over the past few weeks—and what will be done next week when the Prime Minister and the Taoiseach come to Hillsborough—involve our concentrating on ensuring that that is delivered. Of course other issues must be discussed during the talks; the right hon. Gentleman knows what they are. Central to all our activity, however, is addressing the problem that has caused trust to break down. He and other parties will of course be invited individually to talk to the two Prime Ministers on Wednesday, and I hope that the issues will be discussed fully then.

Seamus Mallon: Does the Secretary of State agree that the real weakness is the lack of political negotiations between the political parties? Negotiations are about matters military or paramilitary, and are conducted between the representatives of an illegal private army and the Prime Ministers of two sovereign Governments. Can the Secretary of State understand the difficulties that that causes for the other political parties, which do not have private armies to inflate their importance or to increase their negotiating powers?

Paul Murphy: My hon. Friend is right to say that it is important to involve his party, and indeed all others in Northern Ireland, in meaningful discussions. He is aware, however, that the reason the Assembly lies suspended and there is no Executive is that trust and confidence have broken down. They collapsed because of paramilitary activity. That issue is central.
	My hon. Friend is also aware that other issues are being discussed—issues such as human rights, equality, policing and the devolution of justice, which different parties have brought to the Government's attention. Parties are discussing between themselves, and in different formats, the issues that I know my hon. Friend considers most important. His party met the Prime Minister in Downing street some weeks ago, and all parties will have that opportunity during the forthcoming round of talks.

Iris Robinson: How many times must the institutions collapse before the Government recognise the necessity for new institutions and structures, so that all the people of Northern Ireland can unite behind them?

Paul Murphy: I believe that the institutions established by the Belfast agreement are the best because people voted for them in referendums. They voted for the institutions that we want to restore. The hon. Lady should understand, however, that whatever institutions are established in Northern Ireland must have the confidence of both the Unionist and the nationalist communities.

Tony Clarke: The journey back to devolution will probably involve fresh elections, yet there is concern that up to 200,000 electors are missing from the electoral register, including 50,000 young people who are attainers, and who can get on the register only if they present photo passes. We have a problem with the young engaging in the electoral process in general. Can my right hon. Friend give me some assurance that the Northern Ireland Office will look seriously at the problem of those who are missing from the register, and in particular at how we can get young people to register, making it as easy as possible for them to take part in that process, so that they can have a stake in the Assembly once it is elected?

Paul Murphy: Like everybody in this House, I want to ensure that as many people as possible vote in all the elections that we face. My hon. Friend will know that there have been particular difficulties in Northern Ireland over the years that we have had to address. I realise that there have been some misgivings about the current process, but I believe that the chief electoral officer has introduced an effective method of looking at these matters, and of course there is now a rolling register. However, my hon. Friend may certainly have my assurance that, if the NIO can do something to ensure that more people vote, then all the better.

Quentin Davies: Does the Secretary of State agree that any settlement in Northern Ireland and the future of the Province as a whole must be based on the full implementation of the Belfast agreement?

Paul Murphy: Yes I do, and that is exactly what we have been discussing during talks in the past couple of weeks.

Quentin Davies: Does the Secretary of State recall that article 1.vi of the Belfast agreement recognises
	"the birthright of all the people of Northern Ireland . . . to hold both British and Irish citizenship"?
	If so, why, on 29 January, did the Labour party make the following formal deposition through its lawyers—one cannot get much more formal or binding than that—concerning the case of Mr. McGivern, a Northern Ireland resident who wants to join the Labour party? It states:
	"People resident in Northern Ireland are not British subjects or citizens of Eire and are therefore ineligible for membership"
	of the Labour party.

Mr. Speaker: Order. That has absolutely nothing to do with the question.

Irish Language Broadcasting

Simon Thomas: What discussions he has had with the Secretary of State for Culture, Media and Sport on the establishment of funding for Irish language broadcasting.

Angela Smith: My right hon. Friend the Secretary of State has contacted the Secretary of State for Culture, Media and Sport, expressing his wish that officials from all relevant Departments will continue to explore ways to make urgent progress on the Government's commitments on Irish language broadcasting under the Belfast agreement.

Simon Thomas: I thank the Minister for her reply. She will know that there is a treaty commitment to establish a fund for Irish language broadcasting in Northern Ireland. Will she look at the Communications Bill that is currently going through this House, and which puts on a statutory footing funding for Welsh language broadcasting and for Gaelic broadcasting in Scotland? Will she use that opportunity to set up on a statutory basis the fund promised in the Belfast agreement for Irish language broadcasting in Northern Ireland?

Angela Smith: I can assure the hon. Gentleman that we are looking at all practical and effective ways in which to pursue our obligations in respect of Irish language broadcasting under the Belfast agreement. The Secretary of State has asked me to introduce further proposals for funding, including the establishment of a production fund.

Eddie McGrady: Can the Minister explain why the cultural diversity required under the Communications Bill has been applied to Welsh and to Scots Gaelic, but not to the Irish language? What consideration has her Department given to the very detailed submission made on behalf of the Irish language by Foras na Gaeilge, the all-Ireland body that is trying to instigate those aspects of the Good Friday agreement that refer to cultural diversity?

Angela Smith: I am grateful to the hon. Gentleman for his interest and concern. I assure him that my Department is fully committed to implementing commitments made under the Belfast agreement. We will give the proposals full consideration, and do what we can in the light of the further funding that we hope to make available.

Martin Smyth: On cultural diversity, does the Minister accept that there are more Chinese people who would like their language to be used in public broadcasting? Does she also accept that Ulster Scots Gaelic was the language of Northern Ireland, not Irish Gaelic, and that the latter has been used in the Republic—and now in Northern Ireland— as a political tool, rather than as a cultural one?

Angela Smith: The hon. Gentleman may be aware of my meetings with Lord Laird of the Ulster-Scots Agency. I assure him that we follow what is in the Belfast agreement and fulfil our commitments as well as we are able.

National Stadium

John Grogan: What plans he has for a new national stadium in Northern Ireland.

Angela Smith: There is support in Northern Ireland for a national stadium— indeed, for a competition-sized swimming pool—and it is certainly a possibility that I support. However, I must tell my hon. Friend that my immediate priority is to encourage more people to be active in grass-roots sport by creating better opportunities for participation at community level and to improve the existing sports infrastructure, particularly at local level.

John Grogan: Given that a passion for sport has always united divided communities in Northern Ireland, and that there are now national stadiums in Scotland and Wales—with one on the way in England—does my hon. Friend agree that it would be a powerful symbol of a new beginning in Northern Ireland if the long-cherished ambition of getting a new national sports stadium, free from the sectarian background and history, could be realised?

Angela Smith: I share my hon. Friend's enthusiasm and support for a national stadium, but there are hurdles to be overcome that are not to be underestimated. For example, about £100 million of public sector funding would be required. We should like to consider whether lottery funding could be made available. I take on board his comments and I hope that it is something that we can achieve.

Roy Beggs: I pay tribute to the hon. Member for Selby (Mr. Grogan) for his continuing support for and interest in a national stadium for Northern Ireland. The former Secretary of State, Mo Mowlam, initiated the bringing together of a working party to consider a national stadium. Will the Minister bring together interest groups and seriously address the issue of under-provision for sport in Northern Ireland, and does she agree that there would be huge benefits in making such a provision?

Angela Smith: I am grateful to the hon. Gentleman for his interest. I shall certainly look at the working party's report. As I said, there are hurdles to be overcome, but I think that the aim is achievable, and I have taken on board his comments.

Kate Hoey: The Minister talks about wanting to improve participation in sport in Northern Ireland. Does she believe that it is right that British taxpayer's money goes to fund Irish athletes who then compete against British teams at the Olympic games?

Angela Smith: I am not aware of the circumstances that my hon. Friend mentions. The important thing is that we improve participation in sports in Northern Ireland at the grass-roots level so that as many people as possible can take part.

Northern Ireland Assembly

Jeffrey M Donaldson: What plans he has to devolve policing and justice powers to the Northern Ireland Assembly.

Paul Murphy: The agreement sets out the Government's readiness in appropriate circumstances to devolve responsibilities for policing and justice issues. There is widespread support in principle for that among political parties in Northern Ireland, but significant differences over timing. We are pursuing those issues with the parties at the moment.

Jeffrey M Donaldson: Will the Secretary of State outline what those appropriate circumstances are? It is clear, in the absence of political stability and with ongoing paramilitary terrorist activity in Northern Ireland, that the very idea of devolving justice and policing powers at this time is not tenable.

Paul Murphy: The hon. Gentleman knows that the issue was discussed in the run-up to the signing of the Belfast agreement, and in fact it forms part of that agreement as a matter of principle. He is right to point out that the question of timing is crucial. The matter has been discussed among the parties in Northern Ireland. It is being dealt with, first, in the context of the negotiations and discussions that are being held and will hopefully be resolved as quickly as possible and, secondly, of course, with the agreement of the parties in Northern Ireland.

Helen Jackson: Does my right hon. Friend agree that one necessary first step in the process towards devolving policing powers to the Northern Ireland Assembly is ensuring that every party that wants the reconstitution of that Assembly nominates people to take part in the Policing Board?

Paul Murphy: My hon. Friend is right in that, for policing in Northern Ireland to be complete, everybody in Northern Ireland has to have confidence in its policing system. That includes republicans, nationalists, Unionists, loyalists and everyone else. These matters are being discussed and form the basis of some of the issues that we need to resolve as quickly as possible.

Nigel Dodds: Given the current state of play in Belfast as a result of the loyalist feud and the killings that have taken place—I know that people in my constituency and across Northern Ireland deeply regret that feud and want it to end as soon as possible—will the Secretary of State ensure, in his discussions about policing, that the police and the Army have the necessary resources on the ground to prevent further bloodshed arising from the feud and other terrorist activity in Belfast and throughout the Province? Will he accept that negotiating with Sinn Fein-IRA about further reductions in security and dismantling security installations sends out completely the wrong signal at this very difficult time in Northern Ireland?

Paul Murphy: The hon. Gentleman is entirely right to condemn what has gone on over the past days, weeks and months as regards the loyalist feud, and of course we all condemn the killings at the weekend. It is important that the House is aware that the police are taking a great deal of action in respect of these matters: 70 policemen are involved in investigations at the moment, 37 people have been arrested, and 17 people have been charged with offences such as attempted murder, conspiracy to murder, and so on. Although the police are engaged in those matters, it is important that we carry on ensuring that the talks continue, and that people remain aware that political loyalists such as David Ervine and others are very different from the criminal gangsters evident in past weeks.

John Taylor: In the context of devolution, and given the Government's willingness to proceed with some quite controversial parts of Patten, how about some progress on a part of Patten with which everyone agrees—a new police training centre?

Paul Murphy: I could not agree more with the hon. Gentleman. I know that the Policing Board takes the matter very seriously, and a business plan is out for consultation. I share the board's view about what is a very important part of Patten.

Lembit �pik: Is the Secretary of State aware of the organisation Families Bereaved Through Car Crime? It seeks an improvement in justice in Northern Ireland by having deaths caused by joyriders redesignated so that instead of being classed as driving offences, they would be classed as murder. Does he agree that the organisation's structured and measured approach is a huge improvement on the vigilantism that was often used to resolve such matters in Northern Ireland in the past?

Paul Murphy: The hon. Gentleman is absolutely right. So-called joyriding is a curse in all parts of Northern Ireland. It is a curse in Great Britain too, but it is of special importance in Northern Ireland because it has caused so many deaths. The Under-Secretary of State for Northern Ireland, my hon. Friend the hon. Member for Kilmarnock and Loudoun (Mr. Browne) is dealing with these matters and meeting the families. We are considering holding a consultation process on the matter in order possibly to change the law. We also want to ensure that all the agencies involved will act together collectively. [Interruption.]

Mr. Speaker: Order. Before I call the next question, I ask for order in the Chamber.

Decommissioning

Helen Jones: If he will make a statement on decommissioning of terrorist weapons.

Jane Kennedy: The IRA, the Ulster Volunteer Force and the Red Hand Commando have all suspended contact with the Independent International Commission on Decommissioning. Clearly, we regret that, and I would urge all paramilitary organisations to engage with the commission immediately. It is imperative that both republican and loyalist organisations complete the transition to exclusively peaceful meansreal, total and permanent.

Helen Jones: I am grateful for that reply, but does my hon. Friend agree that it strains people's patience when dissident republicans and loyalists both claim to be on ceasefire while refusing to decommission weapons and carrying out gang warfare on the streets of Northern Ireland? How long will they be able to claim the benefits of ceasefire while they refuse to carry it out?

Jane Kennedy: My right hon. Friend the Secretary of State keeps under constant review the state of all paramilitary ceasefires, but the House knows that we have moved beyond that. We now need acts of completion from the IRA and from anyone else with a role to play in the peace process. The Government and the Independent International Commission on Decommissioning will resolutely continue to pursue complete decommissioning by all paramilitary organisations. Recent events, including the loyalist feud casualties, make it patently clear that all illegal weapons must be taken out of circulation; otherwise, their very accessibility will always remain a threat.

Gregory Campbell: Does the Minister agree that there is increasing cynicism in Northern Ireland about the whole decommissioning project, and that people in Northern Ireland, both Unionists and nationalists, would prefer the forcible seizure of arms by the police and the Army rather than this incessant waiting for voluntary decommissioning after political concessions were given to the political wings of the violent organisations with no end product?

Jane Kennedy: The police take action to seize illegal weapons wherever they have information that those weapons exist. I accept that there is grave distrust of the intentions of paramilitary organisations in Northern Ireland and that the retention of arms distorts the normal political process on both sides of the electoral divide. On those points, I entirely agree with the hon. Gentleman. Our whole objective is to take weapons out of the political process in Northern Ireland; all our energies are concentrated on that effort. [Interruption.]

Mr. Speaker: Order. The House is far too noisy. It is unfair to Members who are here for Northern Ireland questions.

Lady Hermon: The Minister will recall that on 18 September 2002, the then Secretary of State announced that there would be an independent ceasefire monitor. Four and a half months have passed and no announcement has been made. When will the Minister indicate to the House the name of the ceasefire monitor?

Jane Kennedy: That question remains under discussion and the details of the proposals continue to be worked through. It is one of many issues that form part of the discussions as we try to resolve the overall impasse that we face at present.

Secondary Schools

Andrew Turner: What evidence he has collated on the effectiveness of secondary schools in the Province.

Jane Kennedy: Examination results, research and school inspections show that many children in post-primary schools achieve very good results. However, the same evidence demonstrates that too many young people, particularly from disadvantaged backgrounds, leave school with low qualificationsmore so than in England. The Government are committed to tackling that problem.

Andrew Turner: I thank the Minister for that answer, but as the achievement of Northern Ireland pupils has for a generation exceeded that of pupils in England, will she confirm that, in changing the selection system, she has no intention of diluting the excellent Ulster secondary school selective system?

Jane Kennedy: I am happy to confirm that the aim of the post-primary review is precisely to maintain the current high levels of achievement, but also to build a modern and fair education system that enables all children in Northern Ireland to fulfil their potential.

Tom Harris: Does my hon. Friend agree that the 11-plus exam has cast a blight over the lives of far too many thousands of Northern Ireland school students over the years? Can she confirm that education policy in Northern Ireland must try to raise the standard of every pupil in every school and not just of the elite few?

Jane Kennedy: I am happy to confirm that that is our intention.

Good Friday Agreement

Tony Cunningham: If he will make a statement on recent developments under the Good Friday agreement.

Paul Murphy: I refer my hon. Friend to the answer that I gave earlier to my hon. Friend the Member for Glasgow, Anniesland (John Robertson).

Tony Cunningham: I hope that the Minister will agree that we are going through a crucial period in the discussions to re-establish the Assembly. What further steps are being taken to ensure that we create the complete confidence in the Good Friday agreement that is desperately needed on all sides?

Paul Murphy: As I told the House earlier, my right hon. Friend the Prime Minister and the Taoiseach are meeting at Hillsborough next Wednesday. I hope that that will give them the opportunity to speak to all the parties individually and to move the process forward. Everybody in Northern Ireland wants a resolution as quickly as possible.

Peter Robinson: Looking at developments under the Belfast agreement, will the Secretary of State tell us whether the Labour Government's view of the Britishness of the people of Northern Ireland is different from that of the Labour party?

Paul Murphy: The hon. Gentleman is obviously referring to events last week. I have talked to the Minister without Portfolio, the chairman of the Labour party. Both he and I disown what was in the newspapers last week. I am sure that everybody in the House is of the view that people in Northern Ireland are British citizens.

PRIME MINISTER

The Prime Minister was asked

Engagements

Michael Foster: If he will list his official engagements for Wednesday 5 February.

Tony Blair: This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I will have further such meetings later today.

Michael Foster: I thank my right hon. Friend for that reply. Although not supported by everyone in the House, the extra investment in our national health service is making a real difference in Worcestershireincluding a new 95 million private finance initiative hospital. However, there is some concern that the 112 acute beds in the Aconbury wing in Worcester might be under threat. Will my right hon. Friend assure me that the extra investment in our health service will support those acute beds and that, along with our dedicated nurses and doctors, we will have a health service to be proud of?

Tony Blair: I can certainly assure my hon. Friend that we will carry on making the investment in the health service. The 95 million new Royal Worcester hospital is an indication of the number of hospitals being built up and down this country. It is in addition to the 300,000 extra operations a year, the 40,000 extra nurses, the 50 per cent. increase in the number of scanners and the fact that there is not a single national waiting list indicatorin-patient or out-patientthat is not better than it was in May 1997. That is why the Government will carry on with that investment, and why we are proud of our national health service and those who work in it.

Iain Duncan Smith: The Prime Minister said that Labour would abolish the House of Lords and replace it with a democratically elected second chamber. Has the Prime Minister kept that promise?

Tony Blair: In our 2001 manifesto, we said that we would build on the Wakeham commission proposals, which include a 20 per cent. elected element. That was the position of the Government. We put that forward in a White Paper in November 2001. There was no agreement on that. The Conservative party then approached us and said:
	We therefore call on the Government to abandon the White Paper plans and establish a Joint Committee of both Houses to review further change.
	That is precisely what we then did.

Iain Duncan Smith: As ever, lots of excusesbut the right hon. Gentleman made a personal promise and he broke his personal promise. The Labour manifesto said that the Government would
	make the House of Lords more democratic.
	Last night, the Prime Minister voted against the manifesto and broke his personal promise. In the same manifesto, the Prime Minister promised to remove more than 30,000 failed asylum seekers a year. Has he lived up to that promise?

Tony Blair: First, I will correct the right hon. Gentleman once again on the House of Lords. It is correct that in the manifesto we endorsed the Wakeham proposals on the House of Lords. That was the position of the entire Government. The reason why it changed was that, after publication of the White Paper there was plainly no consensus anywhere on those proposals. We were then asked by the right hon. Gentleman and both Opposition parties to establish a Joint Committee, and that is what we did. It is therefore absurd in those circumstances to suggest that we flouted the will of the House or any other body.
	Secondly, on asylum seekers, it is correct that we have not attained 30,000 removals a year. It is however also correct that we are removing more than any other country in Europe and roughly three times the number attained when we came to office.

Iain Duncan Smith: The Prime Minister has broken that promise as well. Now the Government have dropped all the asylum targets and the system is in complete chaos. When he launched that same manifesto, he also said that people should not suppose that he planned to increase national insurance. Has he kept that promise?

Tony Blair: We certainly kept our promises on tax. We said that we would not raise the basic or standard rate, or the top rate of income tax. We did not make a pledge on national insurance. We have raised national insurancethat is coming in this April. We have raised it because it is necessary to get additional investment in our hospitals and the national health service. If the right hon. Gentleman is opposed to that rise in national insurance, let him tell us how he can then support the investment in the national health service.
	The truth is, yes, we have said that taxes will go up to pay for a better national health service. That is because we believe that that is the fairest and best way of financing health care. That stands in stark contrast to the right hon. Gentleman's position, which is a 20 per cent. cut in spending across the board.

Iain Duncan Smith: The answer is that, before the last election, the Prime Minister made a promise, and he has broken it. From April, every single working person and every company will pay for his broken promise.
	He also wrote, in his manifesto that our guiding rule is to deliver what we promise. On asylum, on tax, on crime, on pensions, on top-up fees, on Lords reform and on anything else, he has broken his promise and failed to deliver. The fact is that that publication should be entered for the Booker prize, because everyone knows that it is a classic work of fiction.

Tony Blair: What we promised in our manifesto was to increase spending on the national health service. We are proud that we are increasing national health service spending. We are proud that the Labour Government do not stand for 20 per cent.[Interrruption.]

The Speaker: Order. Let the Prime Minister answer.

Tony Blair: We did promise that we would increase national health service spending. We are proud that we are increasing that spending and that extra nurses, doctors, equipment and hospitals are being delivered as a result. Yes, that is true. We will not stand for a 20 per cent. across-the-board cut in spending.
	As for other countries and the taxes on business, yes, it is true that business, too, will have to pay the 1 per cent. increase in national insurance, but let me say what the alternative is. The alternative is either private medical insurance, which will cost people and businesses[Interruption.]

The Speaker: Order. I say to Mr. Loughton that he must not shout. [Interruption.] Order. I have given an instruction not to shout. The hon. Gentleman must not shout.

Tony Blair: The alternative to business paying the 1 per cent. national insurance is either private medical insurancelast year, in the United States, private medical insurance went up by 13 per cent., and that is what families and businesses would have to payor social insurance. In France and Germany, that has meant a 10 per cent. rise in social insurance premiums for French and German businesses. That is why we promised that we would increase investment in the health service. We will keep to that promise because we believe in the national health service.

Keith Vaz: The Prime Minister has made it clear that the assessment of the five economic tests will be concluded two years after the commencement of the Parliament, which will be in June this year. Given that my right hon. Friend and his officials are usually very well prepared for any eventuality, can he share with the House his proposed timetable for a referendum on the euro if the tests are met, and his proposed timetable for a reassessment of the tests if they are not met?

Tony Blair: All those issues will have to await the outcome of the tests. My hon. Friend is absolutely right to say that the tests have to be completed by June this year and, of course, they will be.

Charles Kennedy: Last week, the Prime Minister said that there were links between Saddam Hussein and al-Qaeda. This morning, a leaked intelligence report says that no significant links exist. Does the Prime Minister believe that the assessment in that document is accurate?

Tony Blair: First, I should like to comment on that document for a moment. It was said this morning by the BBC that I was on the circulation list for that document and that it was a Joint Intelligence Committee document that was submitted to me. It was not. It was an internal Ministry of Defence document. I was not on the circulation list and I did not see it. It is not part of the reports that are given to me by the Joint Intelligence Committee. If the right hon. Gentleman reads the report, as I have done this morning, he will see that, in the round, it is not primarily about al-Qaeda and Iraq. It merely saysthis is absolutely truethat, historically, it has always been the case that al-Qaeda and Iraq would have different positions. What I have said to the Liaison Committee, and this is backed up by the evidence that we have from intelligence submitted to me by the Joint Intelligence Committee, is that yes, on the one hand, we do not know of a link between Iraq and the attack of 11 September but, on the other hand, there are unquestionably links between al-Qaeda and Iraq. Just how far those leaks go[Laughter.] I hope that the leaks have stopped. How far the links go is obviously a matter of speculation, but I should also point out that the situation is not static; it is changing. We are getting fresh intelligence the entire time.

Charles Kennedy: The entire House agrees that the case against Saddam Hussein must rest on his compliance with the weapons inspectorate and on the identification and elimination of any weapons of mass destruction. Given the remarks that the Prime Minister has just made, will he also recognise thatin the court of public opinion in this countryif the case for war is to be made, it will undoubtedly be weakened if not fatally undermined by talking up links between al-Qaeda and Iraq that do not appear to be sufficiently supported by our domestic intelligence services?

Tony Blair: I think that it is unfair to suggest that we have talked up the links. It is unfair because I have made it clear each time I am asked about thisI am asked about it, and I obviously have to respond to those questionsthat we do not rest our case against Saddam and Iraq on the basis of links with al-Qaeda. However, it is also the casetrying, as I said before the Liaison Committee, to choose my words carefullythat it would be wrong to say that there is no evidence of any links between al-Qaeda and the Iraqi regime. There is evidence of such links. Exactly how far they go is uncertain. However, as I pointed out a moment ago, there is intelligence coming through to us the entire time about this. I do not rest my case on this but, each time I am asked, I saywhich is truethat I know of nothing to link the Iraqi regime with the attacks on 11 September. However, it is not correct to say that there is no evidence of any links between the Iraqi regime and al-Qaeda.
	I think that the right hon. Gentleman will find that, far from having pushed this as the reason for action, what we have done on each occasion, and as I have just done now, is respond to questions. I do not think that it is fair to suggest that we are trying to push this in some way as a cover for any lack of argument on weapons of mass of destruction. I believe that our case on weapons of mass destruction is very clear indeed. It is perfectly obvious that Saddam has them. The United Nations has said that he has to give them up, but he is not giving them up at the moment. I hope that the right hon. Gentleman would agree with me that, unless the United Nations ensures that its will is upheld, damage will be done not just to world security but to the UN itself.

Seamus Mallon: Can the Prime Minister confirm that the new Chief Constable of the Police Service of Northern Ireland recently met members of the republican movement? If the right hon. Gentleman confirms that, can he tell the House what understandings may have been reached about military matters with which he himself is currently dealing in the negotiations?

Tony Blair: The answer is that I do not specifically know of meetings between the Police Service of Northern Ireland and republicans. That is not to say that there have not been any, but I do not know of them specifically. However, we are having a discussion with all the parties in Northern Ireland at the moment to see how we can make progress on the basis of fully implementing all the provisions of the Belfast agreement, including ensuring that all paramilitary activity of whatever nature ceases.

Tom Brake: The East Elmbridge and Mid Surrey primary care trust is withholding more than 2 million from my local hospital trust, the Epsom and St. Helier NHS trust. That is hindering the implementation of a Commission for Health Improvement plan and stopping the local trust reinvesting savings and recruiting nurses. Will the Prime Minister ensure that those funds are released immediately to the benefit of thousands of patients locally?

Tony Blair: First, I do not know about the particular situation in that primary care trust but, in any event, especially as I understand that the Liberal Democrats are in favour of devolving those decisions downwards, we should allow the primary care trust to decide for itself how it disburses its money. I simply do not know the reasons for the situation, and I obviously cannot answer on the basis of one question. However, it would be unwise of me to promise to interfere with the decision, which should properly be taken at a local level.

John Robertson: Does my right hon. Friend agree that a peace settlement in Palestine and Israel is of paramount importance to the peace process in the middle east? Does he also agree that if George Bush put as much effort into an Israeli-Palestinian agreement as he has into promoting a war in Iraq, the whole country would be a lot better off?

Tony Blair: I certainly agree with one aspect of my hon. Friend's question. I believe that pushing forward the middle east peace process is an urgent priority for the world, irrespective of what happens in Iraqit is right in its own terms. The conference we held in London was, I think, successful, and a follow-up conference is happening on 10 February. It is vital that we make progress on three aspectssecurity, political reform in the Palestinian Authority, and the development of final status talks based on the twin-state solution of Israel and a viable Palestinian state.

Iain Duncan Smith: Does the Prime Minister think that the London congestion charge is a good idea or a bad idea?

Tony Blair: As I have said before, that is a decision not for us but for the Mayor. Since we have given the power to local government to charge for congestion, we should let it do so if that is what it wishes to do.

Iain Duncan Smith: Everyone in London has a view about whether the congestion charge is a good or bad idea. The Secretary of State for Trade and Industry says that it is a good idea. The Prime Minister usually has a view on absolutely everything, so I do not understand why he is being coy. The Opposition believe that congestion charging is a bad idea and should be scrapped. I know that the Prime Minister is one of the privileged few who will not have to pay the charge, so that may influence him, but will he say, both as Prime Minister and as someone who lives in London, whether the congestion charge is a good idea or a bad idea?

Tony Blair: I am sorry that the right hon. Gentleman is such a control freak on this issueI thought that he was in favour of devolution to local government. Local government has the power to introduce congestion charging, and the Government's proposals allowing that were based on earlier Green and White Papers produced by the last Conservative Government. It is a right of local government to make those charges, and it should be allowed to do so if it wishes.

David Crausby: While almost everyone of sound mind would agree that those who have the ability to go to university should be encouraged to do so, does my right hon. Friend agree that exactly the same opportunity should be afforded to those young people who want to learn an equally valuable skilled trade? What plans does he have to increase the number of apprentices, and will he pursue that with the same vigour with which he pursues university places?

Tony Blair: My hon. Friend is absolutely right. As well as making sure that more people can go to university if they have the ability to do so, it is important that we extend the apprenticeship scheme. About 200,000 young people every year go into the modern apprenticeship scheme, and over 100,000 of them are on the advanced modern apprenticeship scheme. As a result of the additional funding that we are putting into skills training, the opportunity to go on those apprenticeship schemes will increase, which is enormously important, not just for those young people but for the British economy.

Nicholas Winterton: I recognise the Prime Minister's principled and courageous position on Iraq, weapons of mass destruction and the sufferings of the Iraqi people. Will he adopt the same guts and determination towards another brutal despot, Mr. Robert Mugabe, who has brought famine, devastation and violence to the people of Zimbabwe? What advice did he give to his EU partner, President Chirac, and is he prepared to meet with me a deputation from the Zimbabwean Opposition?

Tony Blair: Of course, I would be pleased to meet the hon. Gentleman and his deputation. The options available as to what we can do in respect of Zimbabwe are more limited than they are in respect of Iraq. However, we are doing everything we can to mobilise international opinion, and we are doing it precisely because of the repression of human rights and the appalling situation in which millions of people are starving needlessly in Zimbabwe.

Vernon Coaker: Nottinghamshire police run a hugely successful anti-drugs education programme in local schools, but local people tell me that they are scared to give information to the police about the drug dealers and drug pushers. Should not the Government look at innovative ways in which we can give local people the confidence to say who the drug dealers and drug pushers are, so that we intimidate the drug dealers and drug pushers, and they do not intimidate decent, law-abiding people?

Tony Blair: My hon. Friend is completely right. That is one of the reasons why there will be further measures in the Criminal Justice Bill to protect witnesses. Also, as a result of the Proceeds of Crime Act 2002 we can now seize the assets of drug dealers and make them prove how they came about the money. It is vital that this be seen as part of an overhaul of the criminal justice system, in which we are tightening up the rules that are exploited by these people and making sure that the proceeds of their crimes are taken from them and used to the benefit of the people.

Douglas Hogg: Last night the right hon. Gentleman voted against an elected House of Lords and in favour of a wholly appointed House. He clearly remembers the commitment in the Labour party manifesto to make the second Chamber more representative and democratic. Does he remember who signed the letter commending that manifesto to the electorate? Was it not the right hon. Gentleman who commended it to the electorate? Would he be so kind as to tell us when and why he changed his mind, or was he always content that the electorate should misunderstand him?

Tony Blair: First, I do plead guilty to recommending our manifesto to the electorate, which is not an unusual position for a party leader to be in. Secondly, I have explained to the right hon. and learned Gentleman what has changed. At the time of the manifesto there was a Government position based on the Wakeham commission. When we published the White Paper in November 2001, it was obvious that there was no consensus in this House, or in the other place, for reform. As a result, the Liberal Democrats and the Conservative party told us that the way forward was to abandon the White Paper and instead have a Joint Committee of both Houses. That is precisely what we did. I then combined that with saying that we would no longer have a Government position; we would have a free vote. For the life of me, I cannot see why a free vote is not in the interests of both the Labour party and the Opposition. Incidentally, if anyone was in any doubt about it before, yesterday's vote shows that there is indeed no consensus in this House.

Valerie Davey: If a second Security Council resolution does authorise action against Iraq, will my right hon. Friend assure the House that part IV of the Geneva convention will be upheld, so that cluster bombs, depleted uranium and tactical nuclear weapons would not be deployed by any of the forces acting for the United Nations?

Tony Blair: Of course, we shall always obey our legal obligations, and we would do that in respect of any military action on Iraq. I have saidI think it was on Mondaythat the notion that we have plans to use nuclear weapons in Iraq is completely false. The circumstances in which we use cluster bombs are set out and have been the position for many years. Any weapon that we use will be fully consistent with any legal obligations that we have.

David Trimble: May I refer the Prime Minister to the action being brought by a trade unionist from Northern Ireland against the Labour party's ban from membership of all people of Northern Ireland? If the only defence that can be made is the absolutely ludicrous statement that people in Northern Ireland are not British citizens or British subjects, why is the action being defended? The Prime Minister should tell the Minister without Portfolio, who is muttering to him at the moment, to stop the action and not come to the Dispatch Box and try to justify discrimination.

Tony Blair: It is not the desire to implement discrimination against anybody. It is a difficult situation for all the reasons that the right hon. Gentleman knows. We are not saying in any shape or form that people in Northern Ireland have fewer rights than people in the rest of the United Kingdom. But, for the very reasons of the politics of Northern Ireland, it is a different and difficult situation. He and I have discussed this matter over many years and I hope that we can resolve it, but it has to be resolved with some sensitivity to the broader issues that arise particularly in Northern Ireland.

Chris Mullin: May I say as a friend and supporter of the Prime Minister, although not quite a Blair babe, that I could not support an attack on Iraq unless it was specifically endorsed by a second resolution of the United Nations Security Council?

Tony Blair: I have set out my position for my hon. Friend on many occasions. Surely, the position has to be this: if there is a breach of the original United Nations resolution 1441, a second resolution should issue. That was the anticipated outcome. What resolution 1441 says is that the inspectors go into Iraq, and if they notify the facts that amount to a material breach, a second resolution should issue. That is why I believe that if the inspectors continue to say, as they are now, that Iraq is not co-operating, there will be a second resolution. The only circumstances in which I have left room for us to manoeuvre are those in which it is clear that the inspectors are finding that Iraq is not co-operating, so it is clear that Iraq is in material breach, but for some reason someone puts down what I would describe as an unreasonable and capricious use of the veto. I do not believe that that will happen and I hope that it will not, but I do not think that it is right to restrict our freedom of manoeuvre in those circumstances because otherwise, the original spirit and letter of resolution 1441 would itself be breached. I believe and hope that we will resolve this issue through the United Nations.

Simon Burns: Last week, when I asked the Prime Minister about his Chancellor's damaging raid on pension funds and the collapse in the stock market, he rather blandly said:
	stock markets have fallen across the world.[Official Report, 29 January 2003; Vol. 398, c. 870.]
	Will he tell the House why the British stock market has fallen faster and further than those of our main competitors?

Tony Blair: It has not, as a matter of fact. I can give the hon. Gentleman the figures for 2002. France's CAC index fell 34 per cent. and Germany's DAX index fell 44 per cent., and that compared with a 24 per cent. fall here. It is absurd to suggest that this is the only country in which stock markets are falling, but this is the only major country that has the record that we have on employment and unemployment. As a result of the Chancellor's stewardship, we have the lowest inflation, interest rates and unemployment that we have had for decades. Compare and contrast that with 3 million unemployed, interest rates at 10 per cent. and recession under the Conservatives.

Huw Irranca-Davies: Following a well-publicised televised interview which shows that Saddam Hussein is beyond reproach, a model citizen of the world and not a self-serving propagandist, should not this be the time to pull out the weapons inspectors and welcome him back to the international family, or does my right hon. Friend have a different interpretation of events, as I do?

Tony Blair: I do not think that Jeremy Paxman or John Humphrys are at any great risk in terms of a probing interview. However, there is a serious point. On the idea that Saddam Hussein is a peace-loving person who is simply a victim of American and British aggression, this is somebody who has started wars of aggression against his neighbours on at least two occasions, used chemical weapons against his own people and has a history of brutality, repression and disdain of human rights that is unequalled anywhere in the world after the fall of the Taliban. Whatever people think about the situation in Iraq and the wisdom of the action that we are pursuing, the one thing on which I would have thought that everyone could agree is that Saddam Hussein is a thoroughly dictatorial and repressive man who does not care for the rights of his own people, never mind the rights of the world.

David Heath: There are 90,000 British expatriates living in the Gulf region. Can the Prime Minister tell us what contingency plans are in place to ensure their safety in the event of military action against Iraq?

Tony Blair: Of course, in any area where there is likely to be conflict, we give our own citizens advice and make sure in so far as we can that we give them proper protection. The procedures, which are well known for that, will, of course, be applied in this case, too.

Piara S Khabra: President Bush wanted Osama bin Laden dead or alive, but he is still at large. Will the Prime Minister tell the House about the latest information available on his whereabouts? Furthermore, can he confirm whether bin Laden and his al-Qaeda followers have already crossed the border into Pakistan? If so, what steps are being taken to pursue him over there?

Tony Blair: I hesitate to make the obvious point that, if I knew his whereabouts, I would do something about it, but it is worth making just two points. The first is that we do not know whether he is harboured in Pakistan or not, but we are in touch with the Pakistani authorities, and we have undertakings from them about missions to search any territories that he may be in. The second point, which is very important, is that we have hugely weakened the infrastructure of al-Qaeda, but both President Bush and I said at the time that this is a battle that will go on for years. Those extremists are well dug in in virtually every country around the world. There is not a single major country at the moment that does not have terrorist cells operating. We have destroyed their centre of operations in Afghanistan, but it is important that we pursue them in every other part of the world until this battle is finished and won.

Sustainable Communities

Mr. Speaker: We now come to the statement from the Deputy Prime Minister. [Interruption.] Order. Will those hon. Members leaving the Chamber please do so quietly; there is a statement to be delivered.

John Prescott: Last July, I made a statement to the House about the Government's plans for a step change in our policies for building sustainable communities. Today, I am publishing Sustainable Communities: Building for the Futurea comprehensive programme of action to take these policies forward. Copies are in the Library.
	The future of our communities matters to all of us in the House, and I would like to record my appreciation to the Select Committee for the work that it has undertaken on those issues, including its recent report on affordable housing. Much of the communities plan is properly about housing, but sustainable communities need more than just housing. They need a strong economy, jobs, good schools and hospitals, good public transport, a safe and healthy local environment, better design, more sustainable construction and better use of land, and much more. The plan is part of the Government's programme to deliver better public services, strengthen economic performance and improve our quality of life.
	The history of housing over the past 30 years shows that all Governments have failed to meet housing need. All Governments have failed to provide sufficient long-term investment. All Governments have failed to deliver enough affordable housing, and all Governments have ignored the mistakes of the past, when we built housing estates, not communities. Not only did we underinvest in our housing; we used land wastefully, and too much of what was built was poor quality and poorly designed. In 1970, we were building nearly 300,000 homes a year. Today, it is half that, but the demand has increased. The result is a legacy of spiralling house prices, rising land values and a shortage of affordable homes.
	In London and the south-east, more and more young people and key workers cannot afford to live where they want. They are being priced out of their communities. In other parts of the countryin the north and the midlandsthe housing market has collapsed and thousands of homes face demolition. While private house building has declined over the past 30 years, so has the condition of local authority housing.
	By 1997, the repairs backlog on local authority housing was a record 19 billion. Throughout the 1980s and into the 1990s not enough was done. The problem just got worse. As more people moved into home ownershipmany of them through the right to buylocal authority housing continued to decline. The 1.5 million right-to-buy sales since 1980 cost the public purse a massive 40 billion at today's prices in discounts. Despite the 29 billion in actual receipts, not nearly enough was invested in improving the housing stock.
	Local authorities were denied the money that they needed to repair the homes of their own tenants. Instead, capital receipts from right to buy were used to pay off the national debt. That is the legacy that we inheritedfewer homes being built and the condition of the stock getting worse by the year. We decided that the overriding priority was to halt the decline. That is why we released the 5 billion of capital receipts, which the previous Administration kept in the local authority banks, for housing refurbishment and why we established the major repairs allowance, which released another 1.5 billion a yearand this to apply nationally as the problem applies nationally. That is also why we committed ourselves to making all social housing decent by 2010, and we are on track to do that with 500,000 homes already improved.
	Our first priority was to deal with the 19 billion backlog across the country. The decent homes programme will achieve the replacement of the 19 billion disinvestment by 2010. Now we must tackle the fundamental problems of high demand in the south and a collapse of housing demand in some of our most deprived communities.
	May I deal first with the action that we propose to tackle housing market collapse? I am talking about communities where the properties have become almost worthless and where people on low incomes have become trapped in negative equity. In the worst cases, whole streets have been abandoned. In those places, there is no shortage of housing, but there is no sustainable community either. However, low demand requires a new approachto re-create places where people want to live, not leave. That means not just tackling housing but, where we can, rebuilding sustainable communities.
	We have already invested 5 billion over the next three years to help regenerate those areas, and we have set up partnerships in nine of the worst low-demand areas. Today, I am announcing a new fund of 500 million to help those partnerships over the next three years. In some areas, the only option will be to demolish houses that are obsolete, and we will make that easier for the residents. Home owners already get back the value of their home and the cost of moving. We propose to increase the compensation for the disturbance of moving home by more than 1,000the first increase since 1991. We also propose to prevent the automatic renewal of planning consents, which will reduce the development of greenfield sites in low-demand areas.
	The issues in high-demand areas are different. Rising house prices and shortages of affordable homes, especially in London and the south-east, are having a damaging impact on public services and the country's economic performance. We need a step change in housing supply, reversing the trend of the past 30 years. Two years ago, after extensive consultation, we said in RPG9the regional planning guidancethat local authorities could provide new homes at the rate of 62,000 each year in London and the wider south-east. We put in place a plan, monitor and manage approach to planning, moving away from the failed predict and provide approach of the past, as I announced to the House.
	We have said that if we used more brownfield land at a higher density, we could build more homes on the same amount of land. We are meeting our 60 per cent. brownfield targetseven years ahead of timeand will continue to do so. We are also taking steps to push up the density of build in the south-east.
	Those changes, together with the 350 million extra resources that we are putting into improving planning and design, will increase the supply of new housing on brownfield land and the quality of what we build and where we build. Good planning means the right communities with the right homes and the jobs in the right place. I emphasise right place, as I want to make it absolutely clear that we are not talking about homes anywhere and everywhere. We are talking about homes in sustainable communities to meet the shortfall in supplynot suburban sprawl, not soulless estates and not dormitory towns.
	I recognise and share the genuine concern about our countryside. May I remind the House that a Labour Government introduced the green belt formulas over 50 years ago? [Interruption.] How true. Mr. Speaker, may I remind the House that a Labour Government introduced the green belt planning system over 50 years ago? I am glad that hon. Members appreciate and support that. They did not at the time, as I remember, but I leave that aside.
	It was this Labour Government who provided access to the countryside and proposed the first national park in the south downs, and this Government who added an extra 30,000 hectares of greenbelt land, which is an area the size of the Norfolk broads national park. That is what happened in the first four or five years of a Labour Government.
	We are now taking that further. Today, I give the House a guarantee to maintain or increase green-belt land in every region in England. We are creating a new body, the land restoration trust, to turn 1,500 hectares of derelict land in our towns and cities into new urban green spaces. We are providing resources for English Partnerships and the regional development agencies to reclaim more than 1,400 hectares of brownfield land each yearan area the size of a typical town. Now that is what I call a step change.
	The House will be aware that in July last year I announced four priority growth areas to help to meet the shortfall in housing supply in the south-east. Each area offers an exciting opportunity for new design-led sustainable communities, such as the successful Greenwich millennium village, which is now being built. Each will maximise the use of brownfield land and accommodate growth in a sustainable way, with jobs, housing and regeneration going together.
	The Thames gateway is the largest brownfield site in Europe. Plans for its development have been on the table for years, and we must now turn these plans into action, so today I am announcing new seedcorn investment of 446 million, which will help to attract extra private investment. With our partners, we will set up new local development agencies in east London and Thurrock to increase the pace of development. We will also invest 164 million over the next three years in the other three growth areas: Milton Keynes and the south midlands, London-Stansted-Cambridge, and Ashford. The four growth areas, including London, have the potential to deliver 300,000 more jobs and an extra 200,000 homes in the next 15 to 20 years. We must take that opportunity.
	Every part of the country needs affordable housing, both for rent and for purchase. We are making 5 billion of our housing investment money available for more affordable housing over the next three years, including at least 1 billion more for key worker housingtrebling the current rate of investmentand extra resources for affordable homes built using fast-track, modern methods of building and design.
	We will also tackle the problem of empty homes. In London and the south-east 70,000 privately owned homes have been empty for more than six months. That is not acceptable. The House will be aware that local authorities can lease empty properties on a voluntary basis. It is our intention that councils should be able to bring empty properties back into use through compulsory leasing, as recommended by the Select Committee. I also intend to allow local authorities to end their council tax discounts on empty homes.
	Many rural areas, too, suffer from acute shortages of affordable housing. We are therefore increasing the number of affordable homes built in small rural communities, and we have changed the regulations to make it easier to keep homes bought under the right to buy for local people.
	The Government are committed to home ownership, which has increased by 1 million since 1997, but we also want to protect the social housing stock. Right to buy is one way to help people into home ownership, but there are other ways that do not involve the loss of a social home to the community, and I believe that we could make better use of those schemes. That is why today I am asking the Housing Corporation to lead a new home ownership taskforce to advise on ways of helping more tenants into home ownership, using the whole range of existing ownership schemes, but without reducing the amount of social housing. [Interruption.] I remind the House that such schemes give social housing back to the communitythey do not simply sell it off to the private sector and thereby reduce the number of houses available. That is the sort of social ownership that we have to take into account. The Conservatives spent 36 billion on giving right-to-buy discounts, but there are better ways of using public subsidies to assist home ownership and the provision of public housing. No doubt, we will debate the matter in future.
	Sustainable communities need a safe and attractive local environment. We have already given local authorities an extra 1 billion in the local government funding settlement to improve the local environment and cultural services. I am now backing that up with more funding. Over the next three years we will give 50 million for neighbourhood wardens to help people to feel safer; 41 million to drive up the quality of skills in urban design; 70 million for community-led programmes to improve neighbourhoods; and 89 million to help local authorities to transform the quality of their parks and public spaces. All that will be supported by the proposals that we will make in our forthcoming antisocial behaviour White Paper and Bill, which will tackle issues that undermine our communities.
	The most basic requirement of a sustainable community is a decent home. That is why we are making sure that tenants will be involved right from the start in decisions about how their homes are improved. It is why we are investing 2.8 billion over the next three years to improve council housing, making the private finance initiative easier to use, and providing 685 million of PFI credits to refurbish local authority homes. It is why we are providing an extra 60 million to improve conditions in private housing and 260 million to tackle the problem of temporary bed-and-breakfast accommodation. We also want to improve conditions for people in privately owned homes, especially older people and those on low incomes.
	As the House has often said, there are inadequate powers to tackle bad private landlords who make life a misery for too many of our people, often supported by public subsidy through housing finance. I will publish draft legislation to licence all houses in multiple occupation and introduce a selective licensing scheme to tackle bad landlords in low-demand areas. In advance of the legislation, we are already funding new pilot schemes to target bad landlords.
	The step change that I have described requires a different approach, which links housing with regeneration, growth, transport, public services and good design. It also requires major reforms of our system of housing finance. We must move away from the top-down approach of the past and decentralise our policies and programmes so that we can deliver regional solutions to regional problems.
	I am pleased to tell the House that for the first time we are publishing nine regional daughter documents with the report, which set out what the action plan means for all our regions. As I said in July, we will move towards pooling housing spending in regional pots. Housing strategies will now be drawn up at regional level by new regional housing boards involving the key partners. English Partnerships and the Housing Corporation will also work together at the regional and national levels so that finding the land is directly linked with providing the housing.
	This is a comprehensive programme of action for sustainable communities that I hope will command support across the House. Perhaps I am hoping for too much. [Interruption.] In view of the Opposition's proposed 20 per cent. cut in public expenditure, perhaps they could support these proposals. The programme is backed with substantial resources of 22 billion, a 40 per cent. increase over three years and more than double the cost of the plans that we inherited when we took office. That is a step change in resources by anyone's standards.
	But that is just a start. This is an enormous challenge for all of us. The proposals are about people and the places where they live. They are about raising the quality of life and working in partnership. They are about taking a different approach and creating sustainable communities. I commend them to the House.

David Davis: I usually begin by thanking the Deputy Prime Minister for making a statement and for advance sight of it. But today's statement is characterised by the amount of it that had already been briefed, leaked and spun to the press before the House saw it. That that strategy is deliberate is clear from the leaked letter from the Deputy Prime Minister to the Prime Minister about the communities plan and his right-to-buy proposals. [Interruption.] The Deputy Prime Minister asks for examples. He said in his letter:
	I do not want the media coverage of the Communities Plan to be swamped by headlines on the Right-To-Buy.
	So what did the Government do? They smuggled out the vindictive, punish-the-poor policy cutting right-to-buy discounts in a written statement so that they could not be challenged in the Chamber, then spent the intervening time briefing favoured journalists on a selective view of the communities plan policy.
	The Deputy Prime Minister's biased view of the right to buy was even demonstrated today when he misread his speech, the printed version of which said that right-to-buy raised 44 billion, not, as he said, cost 44 billion.
	The communities plan has enormous implications for our constituents throughout England, and the House therefore has the right to hear about the policy first in the Chamber, and nowhere else.
	We have already had the headlines, but good headlines are not the same as good policy, and there are some serious questions to be answered today. The Government's record in this area is five years of failure. In that time, we have had the new deal for communities, the urban taskforce, the urban White Paper, the rural White Paper and the active communities unit, to name a few. Yet if anything we are worse off than when we started.
	The Deputy Prime Minister has told the House that he wants to build more homes, and to make communities grow and become sustainable. If that is the case, why has the number of newly built social houses fallen by a third since Labour came to power? That is some 35,000 extra homes that could have been available nowenough to house the families currently living in bed and breakfast three times over. Why, during the right hon. Gentleman's time in power, have the fewest houses been built since 1926, despite his claims about so-called legacy? Today's announcement of a dramatic increase in house building, particularly social housing, must be seen in that context. A cruel but accurate description of the right hon. Gentleman's plans seems to be that he intends to bulldoze the north and concrete the south. What he proposes amounts to concreting an area the size of Hull every year.
	Will the Deputy Prime Minister now answer some questions? The Council for the Protection of Rural England claims that the Government's grand plan means that a total of 500,000 new homes will be built on green fields. Will the right hon. Gentleman confirm whether that figure is correct, and will he say how much of that greenfield land will be green belt? Will he set out the full extent of greenbelt and greenfield development under this Government to date and say how much he expects to take place in future years, including under the plans that he has outlined today? His guarantee of greenbelt land is meaningless if all that he is doing is removing the green belt designed to protect our cities and declaring as green belt a field somewhere else.
	It seems, although the Deputy Prime Minister did not say so, that his plans rely heavily on urban development corporationsa Conservative idea that has proved successful, not least in the London docklands where Michael Heseltine oversaw the development of 25,000 new homes and 100 miles of new road links. I am very happy to see newspaper headlines saying, Prezza copies Hezza, but I will withhold any further compliments until we have seen the plans in detail. We will want to look very carefully at the operation of such corporations, and I warn the Deputy Prime Minister that Ashford and Milton Keynes are not the London docklands. Will he guarantee to the House that he will use such corporations properly, as an instrument to release brownfield land, and not as an instrument for compulsory purchase of greenfield land?
	What effect does the Deputy Prime Minister envisage that the expansion to the Thames gateway will have on the growing problem of flooding? I thought that I heard a Labour Member call out floodplains. Just a few weeks ago we saw the problems caused by that issue for people who are trying to get insurance for their houses. What discussions have Ministers had with the insurance industry about those problems, particularly in light of the increase risk as a result of today's announcement?
	The Deputy Prime Minister says that he wants to improve transport infrastructure, but the truth is that he himself cut the roads budget, cutting more than 70 important road projects from Government plans. He cut spending by more than 2 billion in the first five years of this Government. Last year, not one extra mile of major road was built. What is more, the financial pressure that he is putting on southern local authorities today will force them to protect vital services such as education by cutting back on transport services, compounding the problem that the right hon. Gentleman has created. The Government are five years behind the game, and if the Deputy Prime Minister's five and 10-year plans do not work, how are we meant to trust his 20 and 30-year plans? With that in mind, he will forgive the House for judging him by his actions, not his words.
	Overall, employment growth east of London and in Kent is only 1 per cent. a year, compared with 5 per cent. in the west of London. The Deputy Prime Minister claims that he will not create dormitory towns. How will he ensure that? Will not people in the east of London and in Kent have to travel to get to their jobs?
	I have asked specific questions of the Deputy Prime Minister, and I shall be interested to see whether he answers any of them. Hon. Members on both sides of the House will be able to unite in the desire behind his plan, which is to improve the quality of life in Britain for this generation and the next, but there are inevitable differences in approach.
	We cannot overlook the failures of this Government which have brought us to this point. It is all very well the Deputy Prime Minister talking about housing shortages, but has not his direct failure contributed to them? It all very well for him to talk about transport infrastructure, but has not his direct failure led to a standstill on road-building and a standstill on our roads? I could not believe it, but in his statement today he yet again boasted that Labour created the green belt. This is the man who famously said,The greenbelt is a Labour achievement and we mean to build on it. We have teased him about that before. Some thought that he had made a mistake; some thought it a joke; some thought it yet another Prescottism. Sadly, however, today's announcement proves that that is one of the few promises that the Government have set in concrete.

John Prescott: That was another pitiful contribution from the right hon. Gentleman in his attempt to become the leader of his party. He does not have much to beat, I agree, but I do not think that he will do it with contributions like that.
	First, I shall deal with the right hon. Gentleman's complaint, because I take these matters very seriously. I did not leak any of these proposals to the press. I have said that to the House time and time again. I make great efforts to come to the House to make announcements. No evidence was given to back up the right hon. Gentleman's claim. He quoted a Cabinet letter, which was leakeda problem that plagues all Governments from time to time.
	I heard that the right hon. Gentleman had made a complaint about information being given to the press, so I looked into the matter. I found that the only paper with any information about today's statement was The Daily Telegraph, where it appeared in an article by Charles Clover. I went through that article, and I have to tell the right hon. Gentleman that every fact was wrong, except those concerning housing numbers, which I announced last year. Hon. Members may think that I have briefed on the wrong facts, but I like to think that as I know what is in the statement, they would have been the right facts. The right hon. Gentleman's allegation is untrue, and I hope that he will withdraw it or provide evidence of anything in the press today which shows that I leaked anything in this report. I give him the chance to intervenedoes he want to withdraw or to provide evidence?

Mr. Speaker: Order. The Deputy Prime Minister cannot do that.

John Prescott: I get used to allegations without substance, and I hope that people will note what I have said. I have the relevant quotes, and the answers to them, but I will not go into that.
	The right hon. Gentleman made great play of my being vindictive about the right-to-buy policy. My point about that policy, which has continued under this Government, is that the 36 billion of subsidies, which is the cost of the discounts to promote home ownership, is an awful lot of money. If one wanted to extend the right to buy, there are other schemes that are less expensive and, much more importantly, they reserve the public housing for people who cannot afford to buy. Perhaps Conservative Members are not familiar with those schemes. A number of them give people money to subsidise a house purchase but they also return their previous property to the local authority, so they do not reduce public housing. Hon. Members may disagree with that, but it happens to be a fact. That is a difference of choice in our housing policy.
	The right hon. Gentleman complained about other such differences. It is true that the provision of social housing has gone down 1 per cent. every year since 1980; that happened under our Government as it did under other Administrations. [Interruption.] Hon. Members can go and look at the figures. I admit that social housing has declined during my time in office, but in defence I would say, first, that we have spent a lot of time dealing with economic problems to bring about stability.
	Secondly, we decided to put money that was lying idle in the banks into refurbishing houses that had been allowed to decline. All the time the Conservatives were promoting right to buy, they were forcing down standards in our public housing. I chose to make a difference. I chose to use that money to ensure decent housing for people who were living in deplorable conditions. Those conditions had declined not because the money was not available but because it was being used to reduce the debts caused by the failure of central Government at the time. That, I readily agree, is a difference of choice in our housing policy.
	The right hon. Gentleman said that no improvements had taken place. He should visit the new deal areas and the coalfield communities. We gave them the money after the previous Administration implemented a vicious policy to destroy the coalfield communities. We invested nearly 400 million in developing them. [Interruption.] The right hon. Gentleman might live near them but he obviously has not got his eyes open. If he visits the new deal communities, he will see the improvements.
	It is important to take refurbishment and changes in finances into account. The right hon. Gentleman accused us of being five years behind the previous Administration. Yet we are spending 22 billion, which is double the amount that was invested in housing when we came to power. If the right hon. Gentleman believes that that constitutes being five years behind, he takes a Back to the Future approach to analysing figures.
	We could argue money for transport, but we have invested 180 billion in itfar more than at any other time. As for transport failure, I inherited the failure of the financing of the channel tunnel link. We had to refinance it, and many of the areas that are affected by the announcement depend on the new transport link. I am therefore happy to compare our record with that of the previous Administration.
	Let us consider the record on brownfield sites. Under the Tories, there were fewer such sites. We increased them because that was our policy. Hon. Members may well move their hands. Raising them means up and lowering them means down. Brownfield sites decreased under the previous Administration and increased under Labour. Again, our record stands against the rhetoric of the previous Administration. I am proud of what we are doing.
	As I said earlier, the right hon. Gentleman's speech will not help him in his leadership bid. He should ensure that his statements match the facts. Today, it did not.

Edward Davey: Unlike the right hon. Member for Haltemprice and Howden (David Davis), who speaks for part of the Conservative party, I thank the Deputy Prime Minister for his important statement. I welcome the fact that housing, especially affordable housing, is at last getting the attention that it deserves. The proposed new build on brownfield sites in the Thames gateway is long overdue.
	In proposing measures that go beyond tackling the problem of affordable housing in the south-east, is not there a danger of going too far and fuelling the flames of economic overheating in the south-east that caused the difficulties? Does the Deputy Prime Minister realise that many other parts of the country, including rural England, have similar affordable housing crises? Is he convinced that he has got the regional balance right, with the south set to receive more than four times the housing cash of England's five northern regions? Where is the strong regional policy that is rightly beloved by the Deputy Prime Minister? Why is he taking the slow train to regional devolution when that could help rebalance growth? Does not the statement show that the Government have given in to the north-south divide?
	Although some development will be on brownfield land, much of the proposed new housing is on greenfield land. Why have the Government maintained the Conservative Administration's perverse VAT system, which penalises the repair and renovation of old housing stock and encourages greenfield development? How many more acres of countryside must be concreted over before the incentive for environmental vandalism is removed? Why does not the Deputy Prime Minister increase the target of 60 per cent. new build on brownfield land?
	We agree with the Deputy Prime Minister that any new house-building programme must take account of the mistakes of the past. We must build communities and involve all Departments. Why is there so little evidence of joined-up government in the statement? Where is the related transport infrastructure around London and for the regions to support our communities? Why has the decision on Crossrail been shelved when it is central to the viability of development in the Thames gateway? Will the new Cabinet Committee, which the Prime Minister chairs and reports by May, specifically consider funding Crossrail and the Olympic bid?
	Will the Deputy Prime Minister guarantee that the social infrastructure, for example, schools and hospitals, for proposed developments in other places such as Milton Keynes will be there in time to serve the new communities? Will he enter into a contract with the people of Milton Keynes, Ashford and south Essex so that they will not have to accept the homes unless the Government provide the cash for schools, hospitals and public transport?
	The Deputy Prime Minister called his proposals the communities plan. Will he assure us that it will be community led, not quango driven? Why are the Government so focused on the undemocratic Conservative model of urban development corporations, which the right hon. Gentleman rejected when in opposition?
	The Deputy Prime Minister mentioned empty homes. Surely far more urgent action is needed. There are empty homes and homeless people in every region of the country. Why did not he announce the largest campaign ever to end the scandal of empty homes? Would not we make an impact more quickly on the affordable housing crisis, with much smaller environmental costs, by using the homes that already exist? Why does not the Local Government Bill allow local councils to keep the cash from ending council tax discounts on empty homes? [Interruption.]

Mr. Speaker: Order. I cannot hear the hon. Gentleman.

Edward Davey: Although the statement was ambitious, it was also a holding statement. The Government clearly have much more work to do. The jury is therefore still out. The affordable housing crisis continues almost six years into a new Labour Government. It is time for a timetable to end it.

John Prescott: I gave up after two pages of notes but I shall try to answer some of the hon. Gentleman's questions.
	First, I welcome his comments that the statement is ambitious. That is true. He is also right that the plan is not completed. As the right hon. Member for Haltemprice and Howden (David Davis) also pointed out, sustainable communities include many elements, such as transport, education and health. They must be brought together. We achieved that in the millennium village at Greenwich by working across government.
	Other Departments are responsible for most of the expenditure on, for example, education and transport. I have to argue my case for any extra money. The Prime Minister is taking charge of the Cabinet Committee because we have to work across the Government to ensure that we have the infrastructure for community investment and thereby sustainable communities. It is therefore true that other documents and statements will follow.
	However, I remind the hon. Member for Kingston and Surbiton (Mr. Davey) that when I spoke in the House about the review of the Budget statement for the next three years, I emphasised that I would tell hon. Members how the money would be spent. That is why I have made a statement today. The amount was announced at the time, and I now have to apportion it.
	The hon. Gentleman asked whether money would go into a balance of affordable houses and key homes. I have allowed the regions to determine the balance. When I receive their views, we can ascertain the total effect, which the 2004 expenditure plans will set out. I shall therefore have to come back to the House to report on those matters. The hon. Gentleman is right to point out that much work remains to be done, but I have been trying to plan where the money should go.
	The hon. Gentleman referred to brownfield sites. Many are in the Thames gateway, which is an important area that we can use. When we consider sustainable development, we are talking about people and families. Sons and daughters are being told that they cannot live near their mothers and fathers and that they must move elsewhere. I note that those who are firmly ensconced in their areas demand that the others should move.
	We have a responsibility in sustainable communities to try to keep people together where they want to be. That is important. It has been suggested that keeping people together can lead to more land being taken. However, greater density can lead to more houses with the same land take. That is a fair point that I have made previously.
	The hon. Gentleman asked whether we would take more greenfield space for housing. The Council for the Protection of Rural England has been critical and almost suggested that all building could be done on brownfield sites. A representative said on the Today programme that 75 per cent. should be built on brownfield sites. I do not know whether the hon. Gentleman supports that figure. He should consider the difficulties of achieving of that. Some areas of the United Kingdom do not have brownfield sites and I therefore have to strike a balance.
	Nick Scone of the CPRE said on the Today programme:
	We accept that there's a need for more housing and we accept that some it will have to be in the south-east and we accept that some of it will have to be on green fields.
	[Interruption.] That was on the Today programme. I have the exact quote. I know that the CPRE also seems to be sending other messages. It is headed by the former editor of the Standard, whose name I cannot recall. I agree with the statement that I quoted.
	Building on greenfield sites happened even under the Tory Administration. They gave us no extra green-belt land. Conservative Members' rhetoric is not consistent with the facts. However, those who are critical must realise that although many hon. Members said that a target of 60 per cent. was impossible, we achieved it seven years ahead of time. Even if the target was 75 per cent., 25 per cent. would have to be built on greenfield sites. Let us show a bit of intelligence, and recognise reality.
	As for joined-up government and transport policy, let me point out that the Thames gateway depends greatly on the channel tunnel rail link. We renegotiated the arrangements because we were spending so much. A modern transport system is crucialand we rescued the system imposed by the last Administration from bankruptcy. We think that our approach is fair. As for the need for a proper balance, I agree that it is a matter of judgment, and I am here to answer for mine.

Several hon. Members: rose

Mr. Speaker: Order. I ask Back Benchers to put only one question each to the Deputy Prime Minister.

Tony Clarke: I warmly congratulate the Deputy Prime Minister on his statement, while acknowledging the challenges that it issues to communities such as mine, just north of Milton Keynes. Does he accept that such challenges are best met through innovative projects such as Lifespace in my constituency, which I know he has seen? The aim is to develop eco-friendly green housing on brownfield sites, while providing funds for the release of green space for local communities.
	Can the Deputy Prime Minister assure those who say that we are destroying our green belt that English Partnerships will do all it can to support projects such as Lifespace, which are trying to set the Government's agenda and to make it work?

John Prescott: I agree with what my hon. Friend says, and I am grateful for his welcome. As he says, the issues can be different in different areas. We want to see eco-friendly greenfield development, as we say in our report: my hon. Friend should read it. As the Select Committee has also said, energy efficiency and water resource efficiency are also crucial. That has already been achieved with the millennium village. I am not merely advocating a development; the development has already taken place. I initiated it back in 1997. I wanted to build something that we could remembera village rather than a dome, perhaps. The village remains, representing an important step towards achieving the desired standards.
	As for the green space argument, as I have said, more green-belt areas are available. We are ensuring that we can do more and more building on brownfield sites. Increasing the density of housing on such sites will take the pressure off demand for greenfield areas. Meanwhile, we shall see an increasing number of green spaces in our urban areas. Empty spaces will be turned into places that we can enjoy.

Damian Green: My constituents will find the phrase sustainable communities a little ironic coming from the Deputy Prime Minister's lips. Already, with current growth levels, Ashford is short of GPs and school places. Its road network cannot cope, and it is building more houses than jobs are being created. Will the Deputy Prime Minister acknowledge that, in the real world, his statement means creating dormitory towns and condemning tens of thousands of people to a lower quality of life than they deserve because of an apparent bizarre obsession with crude house-building numbers?

John Prescott: The hon. Gentleman makes a fair point about his constituencyalthough I think he advocated the building of the channel tunnel rail link, which has brought more and more housing to his area. In such cases, infrastructure is often slow to follow the development of sustainable communities: if we want sustainable communities, we have to invest. We are talking to Kent county council, and also working through the bodies that we have set up, to see how we can achieve what we want.
	I was pleased that Kent county council endorsed our approach in growth areas, including Ashford. It is important to secure the co-operation of local people. Those in areas such as Ashford, however, must recognise that others also want to live in nice communities. We must create the necessary infrastructure and bring in more people in a sensitive way. We think Ashford is an excellent placeit is connected to the channel tunnel rail linkand we will do our best to allay the fears of people there.

Brian White: I welcome my right hon. Friend's statement. He obviously listened to our representations, and learnt the lesson that infrastructure needs to be built alongside housing. He said that housing would be provided on a regional basis. The south midlands and Milton Keynes cover three regions. Can he assure us that cross-regional issues will also be dealt with?

John Prescott: I thank my hon. Friend for his support. As he knows, I visited Milton Keynes quite recently. It had become a dormitory town for the London area because we had been taking people out of the slums and into greenfield areas, which was right at the time. There were about 12 houses per hectare. If we want to develop we will have to change the density levels, which will pose a challenge. As my hon. Friend knows from our dinner with local authority and regional development agency representatives, that involves two or three regional bodies. The same applies to the Thames gateway, which also covers two or three regions. We need all the co-operation of those bodies, so that they can help in the making of strategic decisions that affect them in the development of new growth areas and sustainable communities.

Mark Prisk: Many of my constituents in Bishops Stortford and east Hertfordshire will regard this plan, if it is imposed, as highly destructive. At the beginning of his statement the Deputy Prime Minister made a promise about the green belt. Can he confirm that no new houses will be built on the green belt in Hertfordshireyes or no?

John Prescott: I think that if the hon. Gentleman had asked the same question of his party's Administration he would have received a very dusty answer. The guarantee referred to the regions, and I think that it is necessary. It is like the commitment involving brownfield and greenfield sites. In some areas there is no brownfield, so there can be no 60:40 ratio. The calculation must therefore be made on a national or regional basis, and the guarantee about green belt was regionally based. There was no such guarantee under the last Administration. I know that the hon. Gentleman is fixated on a county issue, but we must take regional issues into account as well.

Andrew Bennett: I congratulate my right hon. Friend both on his statement and on listening so carefully to the Select Committee. Notwithstanding all the whinges from Opposition Members and the nimby, or rather not in my constituency attitudes, can he give us a time scale for the conversion of all these fine words into bricks and mortar? Could he also have another go at the Chancellor, and try to persuade him to come up with fiscal incentives to encourage people to move from the south-east and occupy many of the good empty homes that exist in the north?

John Prescott: I am grateful not only for my hon. Friend's support, but for the Select Committee's constructive and informed comments. I had a happier experience with that Committee than I had with the Transport Committee, and I look forward to a happy relationship with my colleague in the future.
	We have committed ourselves to a three-year programme of expenditure. As my hon. Friend will see if he looks at regional planning guidance note 9, he will see some longer time scales for some housing projects20 or 30 years on some growth areas. Once we have discussed the details with the stakeholders I will make another statement, but I expect to address the Select Committee before then, and I shall be open to examination then.

Hugh Robertson: My constituency, next door to that of my hon. Friend the Member for Ashford (Mr. Green), contains 12 local pressure groups which are campaigning and complaining about the amount of traffic already on Kent's roads. Will the Deputy Prime Minister give the people of Kent an undertaking that the infrastructure improvements will be made before any new homes are built; otherwise a bad situation will be made immeasurably worse?

John Prescott: The commitments in regard to that area are already covered by transport expenditure, and Ashford's connection to the motorway is included in the plan. There are also other infrastructure investments for the area, which are quite considerable. We are discussing the plan with Kent county council, for whose support I am grateful. The council makes the point that I have been making: an increase in the number of schools and hospitals, more transport and indeed more river crossings are critical to the population increase that is being envisaged. That is why we have had discussions with the Prime Minister to ensure that resources follow our commitments to housing and growth.

Peter Pike: In Burnley empty homes are no longer a problem; they are a living nightmare. Many people will feel that the 500 million announced by my right hon. Friend, although welcome, may well not prove sufficient for the nine pathfinder projects. Will more money be made available, and does my right hon. Friend recognise that all the problems in those nine areas cannot possibly be solved in three years?

John Prescott: I agree with my hon. Friend. Having visited his constituency, I was left with a powerful impression of the way in which such problem areas scar the whole community and give rise to economic and political problems. That is why we designed the pathfinder programmes. As he knows, we have already advanced 10 million in order to begin the preparations. We want to give comfort to those communities, but these things take time. He is rightwe cannot solve all the problems in three years. We are making a start with 500 million for the three-year programme, which will concentrate attention. The problems in the areas in the north that he mentions are entirely different from those in the south-east, which is why we have had to design a separate programme. We hope to learn a great deal from it and to expand it, but it certainly will not be limited to three years.

Nigel Waterson: What would the Deputy Prime Minister say to the hundreds of my constituents who packed into Willingdon school hall last night, and who are concerned at the fact that their local council is being forced by him to find space for 950 new houses in that areaan area in which schools, the health service and roads are already under enormous pressure?

John Prescott: I assume that those people have children who, quite properly, want to live in that area. Before we arrived at those figures, considerable discussion revealed the level of housing demand. I told the House some years ago that we would not simply order people to predict and providethere was some controversy about the figuresbut that we would plan, monitor and manage, and see how things were going and whether demand was increasing. A number of local authorities decided not to accept the figure that they were given, and said that they could meet the demand. It became clear that they could not, and we are now telling them that they are behind with those targets, and that they must act to meet them. Of course, what they can do is to use the density figures that I require of them, and which I referred to. That way, they can meet demandprovided that they do not build four-bedroom executive houses, and instead make better designed, higher density accommodation available to people.

Gordon Prentice: There are thousands of rotten, empty, decaying, blighted properties in my constituency, and next door in Burnley. The Deputy Prime Minister has just told us that the 500 million over three years will be a first tranche. Can he give us some estimate of how much it would cost to bring properties in east Lancashire that are the worst in the entire United Kingdom up to a decent standard?

John Prescott: I believe that approximately 1 million homes in those areas are in various states of disrepair. Assessments are being made as to the exact cost of such repairs, but I do not want to have to wait for the consultant's report. If possible, I want to find some money now and start the programme, but I must establish the money with the Chancellor. He has given me 500 million, and I am very grateful. My hon. Friend's description of those areas is exactly rightthe situation is desperate and something needs to be done. That is precisely why 10 million has been advanced: to begin the proposals and the planning, and to hold meetings with people to whom promises have been made. One factor characterises most of these homes. They have undergone various refurbishment schemes over the years, and people have become completely disheartened with those schemes. Many of those schemes were good at the time, but they did not last long, and something much more fundamental needs to be done. We are making a start with the 500 million. I know that this is a difficult problem, but if I can find more resources and the project proves successful, our efforts will have been worth while.

Eleanor Laing: People who live in the Epping Forest area will be very alarmed at what the Deputy Prime Minister has said today about green belt. In my constituency, it is simply is not possible to increase, or even to maintain, the existing green belt while also undertaking the amount of building that he said is likely to go ahead. Will he give an undertaking now to my constituents that he will not allow plans to build on the ancient forest of Epping forest to go ahead?

John Prescott: There in no plan to build on Epping forest. The hon. Lady must know that it is because of the very difficulty in finding housing land that she mentions that we have moved to a regional requirement, so that those at a regional level can decide that their housing demand be met on a regional basis. If we simply leave the decision to local authorities, every one of them will give a reason why building cannot take place in their area. I hear such reasons from Members all the time, and no doubt I will hear more. They want houses for their constituents, but not built near them. It is a common problem, and it is called nimbyism.

Eleanor Laing: I am talking about a forest.

John Prescott: Yes, I know it is a forest. The regions themselves will advise on these matters, but we should be clear: the demand from existing residents to live in the south-east needs to be met, and it can be met in an intelligent way without closing down all building in that region. I have given some indication of the Government's priorities, and they will guide our policies.

Karen Buck: My right hon. Friend will be aware that the shortage of affordable housing in London is holding back its economy, undermining our capacity to recruit to the public services, and blighting the lives of the soaring number of my constituents who are trapped in overcrowded housing. Unlike apparently every member of the Conservative party, I would very much welcome my right hon. Friend's building some more housing in my constituency. Can he assure me that, in addition to prioritising the key areas set out in his statement, he will ensure that resources are available to build and to maintain sustainable communities right across London, including in areas such as mine?

John Prescott: I think that everyone wants to deal with the problems in the inner-city areas that she talks about, and it is clear that housing is needed in both the private and public sectors. My statement referred to the renovation of houses and to new forms of purchase, and more resources have been made available for that. I have reduced the discount on the right to buy in order to deal with precisely the problems that my hon. Friend mentions. All too often, the right to buy leads to the purchasing of more public housing than can actually be replaced. The question is one of balance: the problems in her constituency differ considerably from those in areas outside London. On identifying those areas with very high prices and levels of homelessness, it was noticeable that most are in London, and we intend to deal with that problem.

Bob Russell: Will the Deputy Prime Minister give an assurance that he will persuade his Government colleagues to offload surplus land and properties as part of the release of land? At the same time, can he assure us that the definition of brownfield development does not include landscaped grounds and sports fields such as those in a former psychiatric hospital?

John Prescott: I am not sure about the last pointI do not think that they are included, but I shall write to the hon. Gentleman on this issue, as there are some peculiar definitions. His first point is a serious one that has concerned me for some time. Many Government Departments have a considerable amount of land available, and to be absolutely truthful, the Treasury always require that such land be sold at the highest market price.

Edward Davey: rose

John Prescott: Don't get too excited. The market price is calculated in the Chancellor's settlements. I have argued that we are being rather silly, in that we are putting up house prices and giving bigger discounts so that people can buy. Surely it would be better to establish a priority policy for available Government land, so that it can be used as one element in contributing to a reduction in the cost of housing, including even the purchasing of housing. We could use land more intelligently than we currently do. I am having some success with certain Departments and less with others, but we are getting on with it.

Kevin Hughes: The Deputy Prime Minister announced a portion of funding to be spent in the north. The former mining communities in my constituency have old and poor housing stock, and the people there have difficulty finding jobs. Will those communities benefit from today's announcement?

John Prescott: Yes, in the sense that the area will get a share of the funds to meet its priority housing needs. My hon. Friend has pressed me before on what we can do for the coalfield communities that were greatly affected by the collapse of the coal industry. Some 350 million is working its way through, but I think that they will still get their share of the normal national programmes. Such funding is distributed north and south, and none of the housing programmes in the northern areas are cut to pay for any sale: they still get that money, and more. However, as I explained in my statement, I have directed some resources towards the greater priorities.

Gregory Barker: If the sustainable communities strategy represents a genuine step change in the amount of building on brownfield sites, will the Deputy Prime Minister take this opportunity to revise downwards the wholly unsustainable, massive house-building targets forced on East Sussex, which has neither the transport infrastructure nor the environmentally suitable sites to meet those targets?

John Prescott: I suspect that, if the infrastructure were provided, the hon. Gentleman would still complain about extra houses in his area. If his point were simply about infrastructure expenditure, I could accept it. However, his comments and many others that are made outside this House are more along the lines of, We do not want any building in this area. I cannot make the promise that asks for, because I have a greater commitment to the homeless, and to the sons and daughters of families who already live in such areas.

Andrew MacKinlay: First, we in Thurrock welcome every unit of affordable housing that might come from this announcement. Thurrock has the most river frontage, the most brownfield sites and the most green belt of all the gateway riparian authorities, and we would welcome our own urban development corporation. Will those bodies address the fact that much of the railway network is to the east of the channel tunnel link and requires substantial upgrading owing to low capacity?
	Secondly, our green belt has been taking in London's household waste. That is unacceptable and we do not want any more.
	Finally, we need a massive boost to our health and hospital provision, which is wholly inadequate.

John Prescott: As on so many occasions, my hon. Friend points out the weaknesses and difficulties that are involved in the transfer that has been taking place in terms of the economic and industrial development of the Thurrock area. Traditionally, transport links have not necessarily developed in that direction or have suffered from underinvestment. We are discussing that with the Secretary of State for Transport, and some relevant proposals are already in his plan. Some areas of London will not be opened up to housing development unless there are connections to rail links. As usual, we have to set priorities, because demands are far greater than resources. As my hon. Friend knows, we have established an urban development corporation that will work in those areas with the authorities to achieve the measures that I have announced. As he says, there are a great many brownfield sites in his area. [Interruption.] My right hon. Friend the Minister for Local Government and the Regions says that there are more in Greenwich. I will not dispute that both areas have many brownfield sites, and I very much welcome that because it will help us to keep on building.

Crispin Blunt: In Reigate and Banstead a regional daughter plan that contains the Deputy Prime Minister's house-building targets still looks like a top-down approach. Why does he know so much better than local politicians?

John Prescott: The hon. Gentleman's own Government were dictated to by their policy of predict and build. There is a long history of the previous Tory Administration imposing targets on local authorities, which did not like them. I said that that was unfair because central Government might be wrong. Central Government and local authorities must combine to agree on housing supply, and from time to time there is a great deal of disagreement. Our proposal to plan, monitor and manage was a way in which to decide who was right when demands for housing were made and how many houses were to be built. The areas that do not want any kind of housing will not be able to achieve what we believe to be the reasonable target set for the whole south-east region, which, with the change in density planning, can be met without new land take. That might mean that there will be fewer four-bedroom houses, but many more affordable homes for ordinary people to live in.

Oona King: Following your strictures, Mr. Speaker, I have no time to say how excellent any of these proposals are, so I shall forget about that.
	Will the Deputy Prime Minister tell me when, in practice, people might be able to buy affordable houses that do not deplete our housing stock, but maintain it? On a small point, will he assure me that when the Tories start bleating on about poor people, he will continue to have regard to families in my constituency, where, for example, five people share one bedroom but cannot move because social housing stock was sold off under right to buy?

John Prescott: We conducted a survey on those matters to see whether any damage had been caused by right to buy, and we found that many abuses of the system had been taking place in my hon. Friend's constituency. For three years, it became profitable for tenants to exercise the right to buy and, following neighbourhood regeneration, to sell the house on for the full market price. That abuse of the system, where there is a desperate need for housing, means that those houses do not go to people who live in them as owners, but that they are rented out at a very high rent that people cannot afford. That has reduced the availability of housing stock. We are therefore taking a number of actions, one of which concerns right to buy and the reduction of discounts so that it is not so profitable for a tenant to do a deal with a buyer who persuades them to do so, then come back to ask for public housing having received the money. That is an abuse of the system that was never intended to take place, and I hope that the Opposition would agree that we cannot condone it.
	As for the time scale to which affordable homes will be provided, the amount of money that is available is 5 billion, with 1 billion for key workers, and we are considering its regional distribution. The number of affordable homes will depend on how we calculate those figures. The cost of replacing a house in the north is very different from that of replacing a house in London, and we must take those factors into account.

Gary Streeter: What specific policies does the Deputy Prime Minister intend to put in place to ensure that these new communities do not simply become four more dormitory towns for London, adding pressure to already congested roads? What ideas do he and his Department have as regards ensuring that the affordability element of any affordable homes to buy can be passed on to the second and subsequent purchasers?

John Prescott: On right to buy, we have made our proposals, but that is not the end of the matterwe shall want to consider exactly what our surveys show. Many local authorities are telling me that they believe that the measure should apply to them instead of the 40-odd that I mentioned. I will have to assess that further, taking into account the hon. Gentleman's point.
	On sustainable communities, the Office of the Deputy Prime Minister: Housing, Planning and Local Government Select Committee produced a report on new towns that showed that although they were excellent in their time, unfortunately they became dormitory towns as people moved from place to place. We have to ensure that jobs are provided, that the infrastructure is in placewhether for roads, hospitals or schoolsand that houses are better designed than they have been in the past and meet the energy and water resource requirements. I have seen all those things embodied in the millennium village concept, which will provide quite a contrast with towns such as Milton Keynes that were built to the old standards of the new towns: here are new requirements for a new millennium. That is what we intend to do, and that is what sustainability is all about. I refer the hon. Gentleman to the report, which will give him more information.

Phyllis Starkey: I welcome the extra funding that is coming to the growth area around Milton Keynes, but I remind the Deputy Prime Minister that it is the strength of our local economy that is causing house prices to rise and requiring additional housing. We are not a dormitory townanything but.
	I draw my right hon. Friend's attention to the remarks made by my hon. Friend the Member for Milton Keynes, North-East (Brian White) about the need to ensure that infrastructure is built at the same time as housing. My right hon. Friend proposes local development agencies in the Thames gateway to provide an overarching view on pushing developments forward. Will he consider such a mechanism in our area to ensure that development is delivered on time?

John Prescott: As my hon. Friend knows, I recently visited Milton Keynes and we had a good discussion about those problems with representatives from the local regional development agencies.
	It is important that people in the community have some say about the priorities that are adopted. When there are three development agencies, all the signs may be that they will work together, but it is desirable to bring them together in one body to reach common agreement and to administer developments. We are doing that in the Thames gateway. I take on board my hon. Friend's point, and we will have further discussions with her.
	My hon. Friend talks about more jobs leading to greater demand for housing in Milton Keynes. That is always a problem, but, at the same time, pockets of great deprivation exist in areas that are not normally associated with new towns. Although the general situation may appear to be good in such areas, we have to address the problems of social exclusion. That is important in the context of sustainable communities.
	I say to my hon. Friend that in many areas different priorities will arise at different times. Milton Keynes is already a built-in community, and it is important that investment in infrastructure is expanded, but the Thames gateway faces a different set of problems. Given that it is a three-year programme, I had to decide on the main priorities in terms of how much money has to be put in now to create infrastructure prior to house building. We should not underestimate the amount of money that is neededI do not want to mislead the House about that. We are back to the language of priorities. Over the next year or so, we shall try to ensure that we get the balance rightthat we create sustainable communities that have the back-up infrastructure, as well as the housing.

John Burnett: There is a huge unmet demand for affordable housing in the south-west, especially in Devonshire. Will the measures that the Deputy Prime Minister has announced lead to a reduction in funding for affordable housing in the south-west?

John Prescott: I have already said that the amounts of money to be made available will be determined once we have assessed the pot of money for each regionin this case, the south-west. Key workers are largely found in the south-east, but I am sure that Devonshire might say that it has them too. The decision on the number of affordable houses to be built in the region will be based on the proportion of key workers there. I doubt that there will be any reduction in the resources in the hon. Gentleman's area: quite a lot of money is being proposed, but we must wait and see what happens. However, I remember that a number of local authorities in the south-west refused to meet the requirements, under regional planning guidance note 9, to build sufficient houses. Meeting need in an area is the way to provide enough houses.

Peter Kilfoyle: I welcome the 500 million being put into the housing market renewal fund. Does my right hon. Friend agree that that money has to be targeted and focused in the pathfinder areas if it is to be used effectively? What does he think of the Liberal Democrat-controlled Liverpool city council, which has spread the money over half the city, including areas that already receive funding under the new deal for communities? Most surprisingly, the city centre, a thriving housing market, is also included. Does my right hon. Friend consider that to be the best way forward for the pathfinder areas? Secondly, will my right hon. Friend say whether his Department has been party to the Treasury's discussions on housing tax credits?

John Prescott: My experience with Liverpool over many years is that one should not put a foot in the water without knowing what one is talking about. I readily accept that my hon. Friend may be offering a fair interpretation of what the council is doing, but I do not know enough to say whether it is right or wrong. We must look at the whole question of finance and housing credits, to which my hon. Friend referred. We might be able to get more money for developments in areas such as his than we do at present. We are actively involved in discussing a number of such ideas with the Treasury.

Several hon. Members: rose

Mr. Speaker: Order. I have let the statement run for an hour and 10 minutes. I have to move on.

Points of Order

Andrew Lansley: On a point of order, Mr. Speaker. I realise that you are enjoined to confine statements to one hour, and that you ran the statement that has just ended for an hour and 10 minutes. However, my constituency is one of the growth areas that the Deputy Prime Minister described, as are the constituencies of my hon. Friends the hon. Member for Castle Point (Bob Spink), for Rayleigh (Mr. Francois) and for Buckingham (Mr. Bercow). I seek protection for Back-Bench Members like us, who had no opportunity to ask questions on the statement. Indeed, the first Back Bencher was able to ask a question only 40 minutes after the commencement of the statement. What can you do to assist those

Mr. Speaker: Order. I shall have to cut the hon. Gentleman short. I ran the statement for 10 minutes over the hour to try to allow every hon. Member wanting to speak a chance to get in. However, I cannot get every hon. Member in: it is as simple as that.

Mark Francois: On a point of order, Mr. Speaker.

Mr. Speaker: I hope that it is not the same point of order.

Mark Francois: No, it is different. The Deputy Prime Minister assured the House that this afternoon's statement had not been leaked in advance to the media. However, a quick check reveals that The Sunday Times of 2 February carried an article entitled Prescott Fires Up Southeast Building Boom

John Prescott: I do not speak to The Sunday Times.

Mark Francois: Well, the article was written by the ironically named Jonathan Leake, the newspaper's environment editor.

Mr. Speaker: Order. I do not want to go through the article. I heard the Deputy Prime Minister say that he does not speak to The Sunday Times. [Interruption.] This is a serious matter. The Deputy Prime Minister gave an assurance to the House, and privately sent word to my officeto methat the matter was not leaked. I take the Deputy Prime Minister's word on that, as I would take the word of every hon. Gentleman. I shall not pursue the matter further.

Paul Flynn: On a point of order, Mr. Speaker. I wish to raise a point of the greatest seriousness. I believe that the House has been misled on a matter of prime importance. You will recall, Mr. Speaker, that on 24 September we were presented with a dossier, at three hours' notice, containing claims against the behaviour of Iraq. On page 34, the dossier stated that, before 1998,
	Iraq consistently refused to allow UNSCOM inspectors access to any of the presidential sites.
	A lot of faith was put in that statement, which seemed to prove that the Iraqi regime had behaved in bad faith. Yesterday, the Foreign Office answered a question of mine by saying that UNSCOM inspectors did have access to the presidential sites, and UNSCOM has confirmed that it visited eight of the sites before 1998. The rest of the dossier is full of statements that have proved to be misleading or, in many cases, completely untrue. As we are going to make the most serious decisions on the basis of military intelligence and dossiers from the Government, is not it crucial that someone comes to the House to correct the gross errors in the dossier before we use such information to send our soldiers to Iraq, where they will kill and be killed?

Mr. Speaker: That is not a matter for the Chair. It is a matter for debate.

Angela Browning: On a point of order, Mr. Speaker. I know that you are not responsible for answers given by the Prime Minister to oral questions, but in the past I have heard you chide him for straying into presenting Conservative policy as part of an answer. When he replied earlier today to a question about the change in policy on House of Lords reform after the 2001 election, the Prime Minister clearly told the House that the Conservative party sought to establish an all-party committee to decide the matter. I was shadow Leader of the House in the year prior to the 2001 election, and I was actively engaged in discussions about setting up such a committee with the then Leader of the House and the leaders of the other two parties in the Lords. That was a year before the 2001 election. The matter was not taken forward because the Government refused to allow the committee to discuss the composition of the House of Lords. That is an important point to make in response to the Prime Minister's answer.

Mr. Speaker: It could be that the Prime Minister will read the hon. Lady's remarks in Hansard.

John Bercow: On a point of order, Mr. Speaker. I seek your guidance. Given that the Milton Keynes and south midlands study envisages another 59,000 homes for the Aylesbury vale district area by 2031, and that there is a pervasive concern that the 8.5 million of infrastructure investment that is required will not be forthcomingwith damaging consequences for traffic congestion, air quality, school provision, medical facilities and so ondo you think that the Deputy Prime Minister will have taken account of the level of grievance felt by Opposition Members? Should not another statement, providing a further opportunity for detailed scrutiny, be provided in the near future?

Mr. Speaker: It sounds as though the hon. Gentleman is putting to me the question that he would have asked had I called him during the statement. Perhaps he can put it to the Deputy Prime Minister sometime.

Peter Kilfoyle: On a point of order, Mr. Speaker. I seek your advice. You may be aware that the elected Australian Senate has passed a vote of no confidence in the Australian Government's line on Iraq. Can you advise humble Back-Bench Members on how they may be able to effect a debate to the same end in this House?

Mr. Speaker: The hon. Gentleman is a very experienced and long-serving Member of Parliament. There were times when I used to go to him for advice and I am sure that he could tell me how to go about securing the debate that he wants.

Food Colourings and Additives

Charles Hendry: I beg to move,
	That leave be given to bring in a Bill to require the labelling of food colourings and additives which could have an adverse effect on the behaviour of some children and young people
	The food that we give our children is becoming an ever more topical issue. Only last week, Jamie Oliver, who appears to be the Government's new school food tsar, said:
	Parents wonder why their children are hyperactive, have gut ache and stink when they come home. It's because the food they are fed is made of . . . 
	I regret to say, Mr. Deputy Speaker, that he then used a word that I should not be allowed to use in this place.
	The reality, however, is that the problem is not only school food, but the food that children eat at home or buy from the local shop on their way there. I am introducing the Bill, which I am delighted has cross-party support, because like many colleagues I have been profoundly concerned by the problems facing hyperactive children and their parents.
	Hyperactivity is a biological not a psychological condition. Children who suffer from it are often very difficult at home, at school and in their relationships with others. They are always restless, fidgeting and impulsive. Often uncontrollable, they can pose a serious danger to other children.
	In one case in my constituency, a young boyit is overwhelmingly boys who are affectedtied his younger sister to a fence with a rope around her neck. In another case, a young boy went on the rampage with a kitchen knife. The families of such children live in constant fear, not knowing how they are going to react at any particular moment. What often makes matters even worse for the parents is to be berated by others for being bad parents because they cannot control their children.
	From our constituencies, we know, too, of the disruption that hyperactive children can all too often cause at school, making life difficult, sometimes impossible, for other students and for teachers. The tragedy is that often their actions are genuinely beyond their control, precisely because the cause of their hyperactivity is biological in nature. Hyperactive children are more likely than other children to be excluded from school, and as a result they are more likely to drift to the margins of society and into crime.
	In trying to help those constituency cases, it seemed at first that almost every door was closed. But then came one bright beacon of light, when I found the Hyperactive Children's Support Group in Chichester, run on a shoestring for 25 years by Sally Bunday and her family, which has proved a lifeline to families who were absolutely at their wits' end. The group has helped to identify the link between children's behaviour and the food that they eat.
	We all know that there has been a massive increase in the number of hyperactive children over the past 20 years. What has changed most in that time is the food that our children are given. Highly processed foods contain less than one fifth of the nutrients than similar foods a generation ago. Indeed, some food seems to contain almost no food at all!
	Mr. Deputy Speaker, you may not be familiar with raspberry-flavoured trifle. It may not be something that is often served in your home, but if it is, I suggest that one evening, you creep into the kitchen, open the cupboard and read the list of ingredients on the packet.
	Apart from a small amount of powdered egg, the product appears to contain no food whatever. That is worrying enough, but the problem is caused not just by the nutrients that have been taken out, but by what is added. The packaging tells us that the trifle contains: sugar, carrageenan, dipotassium phosphate, potassium chloride, adiptic acid, trisodium citratedescribed as an acidity regulator. It also contains carboxy methyl celluloseI have been practising saying that all morning; it is a bit of a mouthful, but probably does not taste so goodbetanin, annatto, hydrogenated vegetable oil, propane-based emulsifiers, milk protein, beta-carotene and fat-reduced cocoa among other ingredients.
	Professor Erik Millstone at the university of Sussex has done wonderful work analysing the studies from throughout the world to establish what connection exists between children's behaviour and the food additives and colourings they consume. For example, in the United States in the 1970s, Feingold found that between 30 and 50 per cent. of hyperactive children experienced a dramatic improvement in their behaviour if they avoided certain food additives and natural salicitates.
	A decade ago, one UK study, undertaken through the Institute for Child Health, looked at 78 children referred to the institute because of their hyperactive behaviour. The behaviour of 59 of those 78 children improved when certain additives were removed from their diet. For 50 of them, additives were then re-introduced and 47 of them relapsed.
	More recently, St. Barnabas Church of England first and middle school in Worcestershire removed 27 artificial colourings and preservatives from its school menu. After only two weeks, one third of parents said that their children were better behaved and one fifth said that their children were sleeping better. Teachers found that pupils who had trouble concentrating were calmer and applied themselves better to their work.
	In Cornwall, Gordon Walker, head teacher of Tywardreath primary school, asked parents to give their children a diet free of 23 specific additives for just one week, and found children were calmer, less argumentative and more able to concentrate. As Mr Walker said:
	You would not feed your child chemicals, so why give them disguised as sweets?
	Other evidence from the Hyperactive Children's Support Group, in a study by Dr. Neil Ward from the university of Surrey, showed that as many as 87 per cent. of hyperactive children react to artificial colourings and that 72 per cent. react to preservatives.
	The Food Standards Agency is also now taking seriously the idea that food additives have an adverse effect on the behaviour of children and, at the end of last year, it set up a panel of experts to examine in more detail the findings of Professor Stephenson in his study of children in the Isle of Wight aged three to five. The Committee on Toxicity of Chemicals in Food, Consumer Products and the Environment has also accepted the likelihood of a link. Indeed, few people now dispute that such a link exists. Those who do so should talk to a few of the parents of the children who are affected.
	The Food Commission has set up a parents' jury. Reading some of the feedback from those parents is extremely traumatic. When asked about the effect of food additives, one parent said:
	My son was totally uncontrollable, flailing his arms around, and I was unable to do anything to stop it.
	When we got home, I looked up hyperactivity in various books, and discovered that one of the common triggers was sodium benzoate. He had been drinking a lot of squash whilst on holiday which contained sodium benzoate. I eliminated sodium benzoate from his diet . . . These days he is a different child. He had always come out of nursery at a run, with his head down, and head butted me by way of greeting. Now when he comes out of school, I get a cuddle!
	That describes in human terms the transformation that can take place.
	The number of additives is truly mind-boggling. There are 400 E numbers and more than 4,000 different flavourings. According to the Food Commission, 40 per cent. of children's food and drink contains additives. The commission has found more than 100 food products targeted at children which contain the main additives that it has identified as likely to cause behavioural change. They are tartrazine, sunset yellow, carmoisine, ponceau 4R and the preservative, sodium benzoate, which is even found in flavoured bottled water. We should certainly be in no doubt that those products are targeted at children, as we can see from the use of children's favourite television and film characters in marketing to promote them.
	The evidence is clear. Part of the cause of hyperactivity is the presence of certain additives and colourings in food specifically targeted at children. It is not the only cause, it may not even be the main cause; but it is a contributory factor whose importance has been overlooked and ignored for far too long. As a result, parents, doing their absolute best to look after their children, unwittingly buy products that turn them into little time bombssimply because they do not have the information to tell them whether the additives and colourings in a food product could change their child's behaviour. Even children's vitamins sometimes contain colourings, so, unknowingly, little Jimmy goes off to school ready to explode.
	I hope that the food industry will itself help to deal with the problem. Some companies deserve specific praise, such as Sainsbury, whose Blue Parrot Cafe range tries to reduce or eliminate additives in products targeted at children. However, we cannot rely on voluntary action alone. That is why the Bill is important. Its aims are simple. It would require food containing specified additives and colourings to be labelled with the words:
	This product contains colourings or additives which may affect the behaviour of some children.
	It would not state that the product would do that in every case or that all children would be affected; it would simply help people to know what to avoid. The Bill would set up a panel reporting to the chief medical officer, which would advise on which additives and colouring should carry such a label, as that decision is not one that should be taken by politicians.
	A hyperactive child, for reasons beyond his control, can cause danger to his family and disruption at school. I commend the Bill to the House.
	Question put and agreed to.
	Bill ordered to be brought in by Mr. Charles Hendry, Mrs. Angela Browning, Mr. Vernon Coaker, Valerie Davey, Matthew Green, Miss Julie Kirkbride, Mrs. Eleanor Laing, Tim Loughton, Mr. Andrew Robathan, Alan Simpson, Dr. Howard Stoate and Mr. David Tredinnick.

Food Colourings and Additives

Mr. Charles Hendry accordingly presented a Bill to require the labelling of food colourings and additives which could have an adverse effect on the behaviour of some children and young people: And the same was read the First time; and ordered to be read a Second time on Friday 28 March, and to be printed [Bill 54].

Orders of the Day

Police

Mr. Deputy Speaker: I remind the House that there is a 10-minute limit on Back-Bench speeches in this debate and in the one following it.

John Denham: I beg to move,
	That the Police Grant Report (England and Wales) 200304, a copy of which was laid before this House on 3rd February 2003, be approved.
	I am afraid that I must begin by drawing the House's attention to an error in the schedule of grants on page 3 of the report. The provision for the Greater London Authority is given as 1,082,393,976; it should be 1,082,396,976a difference of some 3,000. It is a typographical error and has no other effect on the report.
	I shall be brief because I know that a substantial number of Members will wish to congratulate the Government on securing a 6.2 per cent. increase in police resources for the coming year, and will want, in their minds and speeches, to compare that with what their local police forces would face if there were to be a 20 per cent. cut in public expenditure, including on the police, as proposed by the Conservative party.
	The Government are committed to reducing crime and the fear of crime. The British crime survey shows that overall crime has fallen by 27 per cent. since 1997. Crime levels last year were stable. The chances of being a victim of crime are at their slimmest for 20 years. In the past three years, the Government have increased police spending supported by central Government by 1.7 billionmore than 20 per cent. Under our expenditure plans for the next three years, the figure will increase by another 1.5 billion.
	Following the cut in police numbers made by the Conservative Government, police numbers are now at record levels. I am pleased to tell the House that I am confident that we shall exceed our target of 130,000 officers in March 2003. Police training colleges remain full and we are moving rapidly towards the target of 132,500 police officers in 2004.

Tony Lloyd: The Government's record is a credible one and is well received in areas such as mine. As my right hon. Friend said, people should acknowledge the Conservative Government's failure to address crime issues. This Government sensibly introduced community support officers, who deal directly with the fear of crime and reassure the public, but funding for them is not secure and long term. Will he assure the House and the people of my city that there will be a review so that that worthwhile new initiative will translate into the permanent presence of support officers on our streets?

John Denham: I am glad that my hon. Friend welcomes the introduction of community support officers. More than 500 have been recruited this year, and there will be well over 1,000 in about 27 police forces by the spring. We hope, as I shall say later, that the resources in the settlement will help us to move towards the provision of 4,000 CSOs over the next two or three years. We have made it clear that funding for officers recruited this year will be at 100 per cent. of the costs for the current and following financial year, at 75 per cent. for the year after, and at 50 per cent. the year after that. We are considering the level of financial support to offer forces that want to recruit further CSOs next year.
	When we discussed the Police Reform Bill, there was considerable debate, which we understood, about the desire to avoid ring-fencing CSO funding for ever and a day. We always made it clear that chief constables should decide whether to have CSOs. We also said, however, that we would not rule out pump-priming money to enable forces to employ CSOs for the first time, and that is precisely what we have done. We shall obviously need to look, probably in the course of this year, at what will happen following the first three years of funding to which we are committed, but forces now know their position on the officers they have recruited this year. I hope very soon to tell forces what level of support they might receive in each of the next three years if they wish to recruit further CSOs from the next financial year.

Several hon. Members: rose

John Denham: I want to make some progress, but I will take one further intervention for the time being.

Mike Hancock: I also appreciate that the Government's record is credible, but only in part. If the Government's generosity is to be believed, will the Minister explain to the people of Hampshire what the police authority could have done to prevent an increase in the precept of more than 20 per cent.? Many of the initiatives that it would have had to cut are the very ones that he and I as Hampshire MPs have advocated. The authority either had to increase the precept by 20 per cent. or cut police performance. How has the Government's generosity failed us?

John Denham: Hampshire's general grant has increased by 3.1 per cent, and Hampshire has shared in the overall increase in finance made available to the police service. In addition, it will receive money from the crime fighting fund, which will help to support some of the officers recruited over the past couple of years. It will also receive 8.19 million for Airwave, more than 220,000 from the rural policing fund, and about 1.23 million from the funds allocated to basic command unit commanders. All those sums are in addition to the police grant.
	The level of precept is a matter for the police authority. We expect police authorities to take a reasonable decision, having consulted local people on what they deem appropriate. As a matter of fact, the Hampshire precept is almost 9 less than the shire average in England and Wales. That no doubt reflects Hampshire police authority's previous decisions. Although Hampshire is not receiving as much as some authorities as a result of the formula, it has been fairly treated. The decision on precepts must be for the police authority.

Several hon. Members: rose

John Denham: I will take one further intervention from the Government Benches.

Colin Challen: I am grateful to my right hon. Friend for giving way and for meeting me and a delegation from my constituency two or three weeks ago. I intervene on the issue of local democracy. There is a problem not just in rural areas but in metropolitan areas. West Yorkshire's precept, for example, is below average. As some members of the authority have complained about the average Government grant but have kept the precept below average, what message does he have for them?

Mr. Deputy Speaker: Order. Before the Minister replies, may I also offer a message? The three interventions so far have been very long and this is a time-limited debate, so I hope that if the Minister gives way, which he is of course free to do, questions will be precise.

John Denham: I give my hon. Friend a similar response to the one I gave to the hon. Member for Portsmouth, South (Mr. Hancock): the police authority is responsible for deciding the precept. We expect it to be reasonable, and that local views and policing priorities have been sought. I know that some police authorities intend not only to catch up with past underfunding but to expand services. I hope that people in my hon. Friend's area will take a reasonable decision. West Yorkshire received a funding increase of 4.9 per cent.the ceiling of the funding allocationso it cannot claim that it has not been fairly treated in the settlement. The final level of resources available to the police service will depend on decisions taken by the police authority.

Several hon. Members: rose

John Denham: Once I have made a little progress I will consider taking further interventions.
	In November, following the passage of the Police Reform Act 2002, we launched the first national policing plan. It sets out a clear national framework for raising the performance of police forces, balancing national targets with local priorities. It is the cornerstone of our reform programme. Coupled with the investment that I am announcing today, the plan will help to deliver the results that we all want from a modern and effective police service.
	The settlement underpins the four policing priorities set out in the plan: tackling antisocial behaviour and disorder; reducing the volume of street, drug-related, violent and gun crime; combating serious and organised crime; and increasing the number of offenders brought to justice. The settlement will allow all police forces to improve their performance and for the poorest performing ones to close the gap between themselves and the best. As part of that, better use will have to be made of the record and growing number of police officers. We have introduced community support officers, and we are supporting through legislation the greater use of civilian custody staff and investigators to free police officers for operational duties. We have also set about cutting bureaucracy in the police service so that police officers' time is not tied up in unnecessary paperwork.

Nick Hawkins: On the subject of bureaucracy, does the Minister not acknowledge that effective and well-regarded police forces, such as the one in Surrey, are finding that they have less and less freedom to decide their priorities? The force in Surrey is constantly being hit with more targets and more paperwork. Funds that the Government provide are ring-fencedbut not for the things that the police authority, the chief constable and the people of Surrey want.

John Denham: I am not entirely sure whether the hon. Gentleman is advocating having fewer police officers in Surrey; perhaps he will clarify that. We have been discussing with his chief constable ways in which the force can retain officers at the end of their servicefor example, by extending the 30-plus retirement scheme to Surrey. We are also discussing ways in which greater use can be made of civilian staff.
	I hope that I do not have to repeat this point, but before there was a crime fighting fund the aggregate effect of many individual decisions by individual forces was a sharp decline in the number of police officers. The crime fighting fund is ring-fenced, but it is ring-fenced to support the costs of recruiting and paying police officers where they are needed. I will defend that. I will also defend, on the subject of cutting bureaucracy, the fact that, in addition to the grant that we are discussing today, we are paying centrally for the cost of introducing the case preparation and custody scheme, which is an information technology scheme that has the most potential for reducing duplicate paperwork and avoiding people having to write out names and addresses 17 times. Police officers tell me and, I am sure, other hon. Members that that is what they have to do at the moment. I do not think that forces will object to the money being spent on that scheme, even though it is ring-fenced.

Christopher Chope: rose

John Denham: I need to make a little progress.
	Better use of science and technology will improve policing still further. Last month, we published the first science and technology strategy for the police. We are investing in IT. There will be further funding for authorities taking up the Airwave radio communication service. We are supporting the Metropolitan police authority's command, control and communications information system, known as C3i. As I have already mentioned, we are paying for the roll-out of the case preparation and custody scheme, which will enable data on those in custody to be used throughout the criminal justice system.
	I will set out the police funding settlement for 200304 and what I can reveal of our plans for the two subsequent years. As part of the consultation exercise on the funding settlement, I have received 33 representations covering 22 police authority areas. I have taken those representations into account in reaching decisions on the funding proposals that are being put before the House today.

David Drew: I am sure that my right hon. Friend has received representations from Gloucestershire, so we may as well get this out in the open now. Will he say something about the biggest problem facing police authoritiesthe police pension fund? That is subject to the biggest top-slice, preventing any real manoeuvrability in the way in which authorities operate their budgets.

John Denham: I acknowledge that police pension costs are a significant part of the budget of police authorities. Police pension costs to the taxpayer and the Government are high because the scheme is good. It is one of the things that attract people into the police service and encourage them to stay. I do not know whether my hon. Friend is advocating cutting the police pension scheme.

David Drew: No.

John Denham: I did not think that he was, but it was important to establish the point.
	When we consider different ways of dealing with police pension costs, I am sure that there will, as I said last year, be a case for bringing greater stability into the system. We have been working on that. Forces should not be hit heavily from one year to the next because they have a cohort of officers retiring in one particular year. However, I would not want to offer the possibility of pension costs not being met from the total pool of resources available to the police. Pensions cannot be shuffled off for somebody else to pay for. We must ensure that we have a modern pension structure for the future. We can give some planning assistance to police authorities, but it is an illusion to think that we can somehow magic away the costs of paying the pensions of those who have served the community well. We cannot say that those costs will not be any sort of burden on the police finance system.
	The settlement for 200304 is a strong one that builds on our substantial investment in policing over the past three years. We are providing grant to support overall police spending of 9,683 millionan increase of 6.2 per cent. More than 90 per cent. of all supported spending is directly available to police authorities
	The police grant report deals with Home Office general police grant for revenue expenditure, which amounts to 4,288 million in 200304. In addition, police authorities will receive revenue support grant as local authorities. The total general grant will be 7,312 million, which is an increase of 4.3 per cent. on the figures for 200203.
	In addition, I am providing 600 million for a range of specific initiatives and 270 million to support police authority capital programmes. I will also spend 700 million centrally in direct support of the police. A further 51 million will be available from criminal justice service IT funds next year to meet the costs of rolling out the case preparation and custody scheme.
	For 200405 and 200506, the cash provision will grow by at least 4 per cent. a year. By 200506, funding for policing will be up to 1.5 billion a year higher than in 200203, which represents a cash increase of 16 per cent.

Jim Knight: I welcome the general increases in police funding that the Government are making. My right hon. Friend will, however, understand the disappointment in Dorset that we are on the floor of the increase, receiving 3 per cent. Dorset is hit especially hard by the formula. We are a low wage, high house price economy, so we are hit by resource equalisation and do not benefit from area cost adjustment. Will he comment on that? I ask him to understand that, if a Division is called, I may have to abstain. I cannot support the formula, even though I support the increases in funding nationally.

John Denham: I will come to the details of the police grant formula in a moment. The substantive issues that my hon. Friend raised in respect of the area cost adjustment and resource equalisation have been dealt with in the overall RSG settlements. I am confident that my right hon. Friend the Minister for Local Government and the Regions will deal with those issues in the debate that follows this one. I will be going through the funding issues.
	Dorset has been protected this year through the application of floors and ceilings. A simple application of the formula would have led to Dorset having a lower level of resources. By capping authorities that might have received greater funds, we have been able to support Dorset. The settlement reflects that. For Dorset, as for other forces, there are substantial resources over and above the grantfunds for Airwave; support for the recruitment of extra police officers through the crime fighting fund; 440,000 through the rural policing fund; and just under 500,000 going directly to police superintendents in basic command units. There is a substantial investment in Dorset over and above the headline figure of a 3 per cent. increase in grants. I hope that my hon. Friend will feel able to support that, should there be a Division.

Mark Prisk: rose

Christopher Chope: rose

John Denham: I will make a little further progress and then give way.
	Before giving details of the funding, I should explain briefly the changes that have been made to the funding formula that is used to distribute general police grant. We reviewed the formula as part of a review of local authority funding formulae. We decided to consider two options that have widespread support among the police community.
	The first option was that we should update information on policing activity that underpins 80 per cent. of the funding formula, replacing data that were collected in 1995; the second option, in effect, was that we should eliminate the establishment componentan old grant damping mechanism that was introduced in 1995. As part of the changes, we have introduced floors and ceilings to protect against grant instability from year to year. As I have already said, the floor was set at 3 per cent. and the ceiling, or maximum increase, at 4.9 per cent.
	Floors and ceilings are not part of the local government arrangements that are operated by the National Assembly for Wales. I shall make separate arrangements from funds outside the grant to ensure that Dyfed-Powys and South Wales police authorities, which would otherwise receive a grant increase below 3 per cent., receive the same floor protection as police authorities in England. That additional support is worth 5.1 million to the police in Wales.

Christopher Chope: The Minister recognised in his answer to the hon. Member for South Dorset (Jim Knight) that Dorset will have an even worse deal next year. One way in which Dorset could deal with that problem would be to have a freeze on recruitment, but the police have apparently been told that if they freeze recruitment they will lose moneys from the crime fighting fund. Can the Minister assure us in Dorset that we will not lose those moneys if our police authority freezes recruitment to achieve an increase of less than 19.6 per cent. in the precept?

John Denham: I am sure that all the hon. Gentleman's constituents have noted his call for a freeze in police recruitment in Dorset. I strongly suspect that the average resident of Dorset would rather have more police officers than a freeze. We have not yet finalised the crime fighting fund arrangements for the coming year, but police forces must maintain the numbers for which they receive support under the crime fighting fund and recruit more police officers to access additional resources. The point of the crime fighting fund is to have more police officers, but the people of Christchurch will have taken note of what the hon. Gentleman said.

Mark Prisk: Seven interventions ago or perhaps longer, the Minister made a statement, which he has just repeated, about his pride in the increasing number of police officers. In Hertfordshire, however, we are 200 officers short. How can it be right that this year we also face a 5 million shortfall in what the force needs simply to stand still?

John Denham: The hon. Gentleman will know that Hertfordshire will share in the increase of resources, as will other police forces. His police force will get sums over and above the 3 per cent. grant increase, including 3.14 million for the crime fighting fund. We did not receive any representations from Hertfordshire constabulary on the funding settlement that I announced today. The hon. Gentleman would perhaps have been wiser to acknowledge that in March 1997 there were 1,759 police officers in Hertfordshire, whereas in March last year there were 1,825so the policies introduced by the Government have led to an increase in the number of police officers in Hertfordshire.

James Paice: Will the Minister admit that there is a slight risk that he will be misunderstood? The police authority boundaries in Hertfordshire are not the same as they were in 1997, so his comparisons are incorrect. He said that he had not received any representations from Hertfordshire, but will he confirm that his own Home Office officials met Hertfordshire police authority last week?

John Denham: I will need to take advice on the latter point, but the information given to me by, presumably, the same officials, was that no representations had been received from Hertfordshire. If I have inadvertently misled the House I will seek advice and certainly seek to correct the record. Boundary changes have affected a number of forces on the outskirts of London, but the figures that I gave are those established for Hertfordshire.
	As I mentioned earlier, my right hon. Friend the Minister for Local Government and the Regions has announced wide-ranging changes to funding formulae that affect all local authorities in England, including police authorities. The area cost adjustment and resource equalisation are matters for him.

James Clappison: While the Minister is checking what he has received from Hertfordshire, will he check something else? I have received a letter from the chief constable of Hertfordshire, who says:
	Dear Mr. Clappison
	You will have received a copy of the letter dated 19 September 2002 sent by the Hertfordshire police authority chairman to the Minister of State John Denham about his concerns around the damaging effects of a poor financial settlement . . . on police in Hertfordshire.
	Will the Minister look into that as well?

John Denham: Will the hon. Gentleman remind me of the date on the letter?

James Clappison: The letter is dated 11 November 2002, and the letter sent to him was dated 19 September 2002. A letter is also on the way to him from Hertsmere borough councilfrom all parties, I believecomplaining about the effects of the settlement.

John Denham: The funding settlement was announced after 19 September. We received many letters from chief constables, police authorities and others who had been stirred up by Opposition Members into believing that there were going to be swingeing cuts in police officer numbers. I do not give credence to representations made before the funding settlement was announced. I have talked about the representations that I have received since the announcement of the funding formula, which, of course, gave the lie to stories that hundreds of police officers would be cut across the country. I am afraid that a little bit of dead horse flogging is going on among Hertfordshire Members.

Mark Francois: rose

John Denham: I will give way in a moment to the hon. Gentleman, who has another Member's place. Someone has clearly left the Chamber to put out their press release, regardless of whether they spoke in the debate.
	I have said that capital will increase. Capital grant and supplementary credit approvals will total 190 million. Once again, we are seeking to reinforce the police reform agenda by allocating 20 million for a further premises improvement fund. In many areas, the fund brought about much-needed improvements in police stations, working conditions and so on. In addition, we will support the Metropolitan police's C3i project, Airwave and the case and custody project. Police authorities will receive funding for specific initiativesabout 600 million will be used to back police reform and modernisation, including funding for special priority payments for police officers. Some grants will be available to all forces in England and Wales, others to help forces with particular requirements. We will make details available in due course. The crime fighting fund will continue, providing money towards a further 650 recruits in 200304, and continuing to sustain many of those recruited in recent years.
	We must remain vigilant against the terrorist threat. Counter-terrorist funding announced in the 2002 budget for police forces will be maintained, and we are determined to make sure that the police service will continue to be resourced effectively to meet its counter-terrorist commitments. In addition to the 47 million funding being provided to the Metropolitan police, a further 12 million will be available to forces outside London, complementing existing funding streams for security and counter-terrorism activities.
	The pay and conditions package achieved by the Police Negotiating Board is fully provided for in the settlement through general revenue grant and specific funding. A sum of 82 million is included in the general grant settlement, and a further 38 million is to be allocated as specific grant for special priority payments. A sum of 41 million will be available towards the costs of the community support officers who will act as the eyes and the ears of the police. The 30 million rural policing fund will continue.

Roger Williams: I congratulate the Minister on his pronunciation of the Dyfed-Powys police authority, but not on the settlement that it received. A 3 per cent. settlement is on the table, leaving the chief constable to find an extra 5 million to maintain the status quo, which will mean a 28 per cent. increase in the community charge. People in Wales would like policing to be devolved to the Assembly. I am sure that the settlement will enhance that view.

John Denham: On grant, the Welsh forces have been treated on the same basis as English forces, with the exception of the Welsh forces that have received additional funds not available to other forces to bring them up to the floor of 3 per cent. Therefore, I do not see how the hon. Gentleman can honestly say that we have treated Welsh forces unfairly. The truth is that everybody benefits from having a well-integrated police service in England and Walesyes, with well-managed and accountable local forces, but co-operating together to fight those crimes, including gun crime, drug crime and organised crime, that persistently refuse to stay within national boundaries or police force boundaries. I believe that our constituencies in England and Wales are best served by building on the arrangements that we currently have.
	I should like to run through a few more of the headline figures. The sum of 25 million is being made available to support continued police operations against street crime. As I have just mentioned, the 30 million for rural policing will continue. Next year, we shall target 50 million of funding directly on basic command units in high-crime areas. The bulk of the money will be available to those units that are at the forefront of local policing in high-crime areas, working with crime and disorder reduction partnerships. The money is part of the 143 million funding for crime reduction to help to combat drugs, which my right hon. Friend the Home Secretary announced on 21 January.
	In the grant settlement we have once again taken account of the unique position of the Metropolitan police in carrying out national and capital city functions. A special payment of grant is made every year in addition to that provided through the funding formula. The grant has increased from 197 million this year to 202 million next year.
	I have already talked about the support available for counter terrorism, for community support officers and for the C3i communications system.

Mark Francois: The Minister will be aware that one of the particular challenges that the Essex force faces is the drain of officers to the Met. It also faces the challenge of additional national insurance costs from April, and additional pension costs. The right hon. Gentleman knows that Essex police authority had a very tough settlement this year. How does he expect the force to continue to fight crime effectively if he will not give it the resources to do the job?

John Denham: The hon. Gentleman should consider what it would be like if his party were in power and were implementing a 20 per cent. cut in public spending. Police numbers fell when his party was in power, and they have increased under this Government.
	Essex has been supported; it has the floor of 3 per cent. In addition, it is receiving 5.79 million extra to pay for the costs of police officers recruited in recent years. That is the sort of extra support, over and above the police grant, that we are giving to Essex, and that the hon. Gentleman would do well to welcome.
	Finally, I acknowledge that forces in the south-east have recruitment and retention difficulties, on which we are working with the Metropolitan police and police forces in the south-east. A range of issues are under active discussion, and I hope that we shall be able to bring forward more details of some of the initiatives that we can take in due course.
	In summary, I believe that the funding arrangements for 20032004 and beyond that I have described are a substantial commitment to policing and to combating crime. We should never forget that under the Conservative party crime doubled and police numbers were falling. Police numbers are now at record levels. Crime has fallen over the past few years. We need to do more, both in building up our police service and bringing down crime and the fear of crime, and it is our intention to do so.

James Paice: The right hon. Gentleman has a reputation in the House for being a very genuine and serious, as well as able, Minister. I was sorry, therefore, that in his opening remarks he seemed determined to stir up anger on these Benchesin my view somewhat unnecessarily, especially as I shall show that he was, to say the least, playing fast and loose with facts and figures.
	I want to start by saying something with a personal touch, and I ask for the indulgence of the House. I want to put on the record my gratitude to the Government for the two special payments they have made this year to Cambridgeshire constabulary: 1.1 million towards policing Huntingdon Life Sciences and protecting staff, suppliers and so on who were under threat from so-called animal welfare activists; and, more important, 3.5 million made available towards the cost of Operation Fincham, which took place in my constituency, relating to the tragic disappearance and death of the two little girls last August. It was a huge financial strain on a small police force, and I am grateful to the Government for recognising that.
	Before turning to the specific proposals, which even the Minister took some time to get to, I think we should look at the background to which the right hon. Gentleman referred. First, I remind the House that at the last general election there were some 1,600 police officers fewer than when Labour came to power in 1997.

James Purnell: Will the hon. Gentleman give way?

James Paice: Not yet.
	While it is perfectly true that police numbers have risen since the election, the fact remains that in the six years of Labour Government which we have now suffered police numbers are up by less than 3 per cent., assuming that the Minister is right and we meet the 130,000 target. That is an average increase over six years of just 500 officers a year. Throughout the 18 years of the previous Conservative Government, the average annual increase in the number of police officers was 850, and in the last year numbers went up, contrary to the impression that the Minister and his puppets behind him seem to wish to give. Of course, we welcome more police numbers, but the much heralded recent increase must be seen against the first four years of major reductions, which I remind the House were part of Tough on crime, tough on the causes of crime.
	My second point concerns bureaucracy. Diary of a Police Officer, the study that the Government commissioned just under two years ago, produced some horrendous statistics and figures. They made horrific reading: levels of bureaucracy, form-filling and time-wasting keeping officers off the streets. That is common ground between me and the Minister.
	I had hoped that the right hon. Gentleman would tell us a little more about what has happened since then. Last year he said that the roll-out of the computerised custody system was imminent. How many forces now have the system and when is completion of the roll-out expected?Will the Minister also tell us what assessment he has commissioned of the effectiveness of that system in releasing officer time, which we all wish to see?
	I come to the issue of the council tax precepts, which several hon. Members have referred to in interventions. The Minister avoided any reference to those precepts by saying that the matter is basically down to the local police authority. Of course it is, but I cannot believe that the Treasury has not told the Home Office what it believes the average level of council tax precept increase should be based on this year's total standard spending settlement. The Minister does the House, not to mention police authorities, an injustice in not giving some guidance on what the Government believe should be the average increase in police authority precepts.

Colin Challen: The hon. Gentleman and I both took part in consideration of the Police Reform Bill. I recall his saying then that there was far too much Government interference in the affairs of local police authorities. Is he now reversing his opinion and saying that we should have Treasury interference in them?

James Paice: No. Either intentionally or unintentionally, the hon. Gentleman distorts what I said. I did not say that I wanted the Government to state what the council tax precept should be.

Colin Challen: That is the effect.

James Paice: Far from it. What I want to know is this: when all the figures were worked out, what assessment did the Government make of what they should mean for council tax precepts? Those are statistics that the Treasury always works out. I would not mind gambling, if I were that way inclined, that in the next debate, when we discuss the wider issues of council tax rises, we shall be given a statistic for the average expectation. I find it odd that we did not receive it for the police. Of course, the final decision must be for the local police authority, but I am surprised that the Government have not given us that statistic.
	I am also surprised that the Minister included among the raft of figures that he read outthey were relatively meaningless towards the end of his speech, as he did not read out any comparatorsthe 30 million for rural areas, as though he should have been given some plaudits for retaining that provision. I remind the House that it was this Government who proposed taking that money away from rural areas. It takes some barefaced effrontery for the Government to seek credit for not doing something that they proposed and that would have damaged rural areas.
	This coming year will be the first full year in which the impact of last year's police reforms can be felt, including those in the Police Reform Act 2002 and those carried out under the Police Negotiating Board. According to the Minister, those reforms are fully funded in the settlement. However, the Association of Police Authorities believes that, as a standstill budget, authorities needed an extra 482 million, compared with the 275 million that they are getting. It claims that 137 million is needed above the increase in TSS simply to cover inflation and pay pressures, plus a further 70 million for pensions.

Jim Knight: Given that there is some interest among Labour Members in what would happen if the Conservative party got into power, will the hon. Gentleman tell us whether he would grant the request made by the Association of Police Authorities?

James Paice: To my immense regret, we are not in power, and I do not envisage our being so in this financial year. It is this year's figures that we are talking about. However, as the hon. Gentleman raised the issue, I can tell him that when this party returns to power, we will seek to increase police numbers above whatever they are when we take office. What is more, we will ensure that the police have the appropriate funding.

Kevin Brennan: Will the hon. Gentleman explain to the House how it would be possible to increase police numbers while not only making a 20 per cent. cut across the board, but implementing the other policies to which his party has committed itself? It has already committed itself to matching Government expenditure on defence and international development. [Hon. Members: Oh dear.] It is no good saying Oh dear. He needs to explain to the House how he will increase the numbers.

James Paice: Nobody speaking for the Conservative party has said that we will cut the totality of Government expenditure by 20 per cent. If the hon. Gentleman had read the article that gave rise to all the hype and hysteria, he would understand that the idea was to reduce by 20 per cent. most central Government costs and not total Government expenditure. Let us put that proposition to bed once and for all.
	Although the 3.7 per cent. increase in total standard spending may sound generous, it is far from generous in comparison with the actual increases in the costs faced by forces. Many of those costs were imposed by the Secretary of State through legislation or because of his leaning on the police negotiating body.
	I read the 2000 comprehensive spending review with some surprise, as it appears that the grand total in police expenditure for next year is more than that which the Minister has announced. Will he explain to the House why, when the Government have rightly taken the trouble to plan out expenditure over a period of three years, the figures have ceased to be correct and he has announced a police settlement of less than that given in the CSR?
	The main figure to which the Minister referred is the 6.2 per cent. increase in police spending. Hon. Members who have not studied the papers may wonder about the difference between that figure and the 3.7 per cent. figure to which I have referred. Of course, the answer is the money, over which the Home Secretary wishes to keep control. Out of the total of an extra 543 million to be spent on policing, 268 million, or 49 per cent. of that total, will be spent at the behest of the Secretary of State. Some of it will go to police authorities, but only if they spend it as he dictates.
	If that centralisation of control continues, ever more power will go to the centre. That continues the trend that I identified a year ago, as it provides the barest minimum to police authorities and keeps as much as possible for central control. However many reservations the Home Secretary may have about the ability of individual authorities to make effective decisions, the temptation to take central control should be resisted. He should be taking up the challenge of deciding how to improve local accountability and ensure more effective financial control locally, rather than taking things in the other direction and taking such responsibilities upon himself.

James Purnell: Is not the reason for ring-fencing money the need to ensure that it goes into increasing police numbers? Is that not exactly the problem that the previous Administration had when they promised in 1992 to increase numbers by 5,000, although they ended up falling by 1,500? Will he not therefore congratulate the Government on having increased the number of police officers in my area by 100 since 1997? That would be entirely reversed if we cut public spending by 20 per cent.

James Paice: I remind the hon. Gentleman that police numbers rose considerably in the last year of the Conservative Government, when we did not have a crime fighting fund. It was the Conservative Government who rightly gave chief officers and authorities discretion as to how their resources were spent. I believe that, prior to 1993, the Home Secretary decided on the establishment for every police authority. In my view, that sort of centralisation is wholly unacceptable, but I believe that we are heading back in that direction. Of course, I welcome extra police officers, but I also believe strongly in discretion for those at a local level to use resources as they think fit.

John Denham: Will the hon. Gentleman clarify the position, as I am getting confused? A few moments ago, he committed his party, should it ever return to government, to having more police officers than the number at the time when it takes office, whatever that number is. As he has opposed using either of the mechanisms that have been used consistently to increase the number of police officers, how on earth does he intend to deliver that commitment? Is it merely an empty promise, because he has no intention of introducing mechanisms to fulfil it?

James Paice: The Minister will have to await the detail of our proposals. I would not wish to spoil him by giving them all in one go. The basic thrust it that we should remove obstacles from police authorities that prevent them from making decisions on spending money on police officers, remove the reasons for police officers being locked up in police stations or courts and make the whole arrangement far more flexible and adaptable so that the police authorities and chief constables can use the extra resources to which they will be entitled. That should be done by devolving more to them so that they can maximise the number of officers on the beat. That would be the simple and obvious way forward if it were not for the demand on centralising control that the current Government have adopted.
	On the crime fighting fund, we have debated the issue of centralisation, but will the Minister tell us a bit more about next year? I understand that he has decided to extend the fund, which is welcome in terms of extra money, although I would prefer it to be devolved. I also understand, however, that the Government now expect an underspend in the crime fighting fund within the existing provision. I am grateful that he has apparently decided that that underspend should be used to extend the fundI believe that it will cover another 650 officersbut will he explain where the underfunding has come from? If the crime fighting fund has been a success and he has got the extra 9,000 officers recruited between April 2000 and this coming March for whom he has set out the funding, where is the underspend? Has it arisen because, as my hon. Friend the Member for Christchurch (Mr. Chope) suggested, some police authorities have been so strapped for cash that they have been unable to retain all their crime fighting fund officers directly, or because they have dropped behind the criteria on maintaining their normal establishment? Will the Minister please explain to the House how he has arrived at an underspend on a very clearly and carefully calculated crime fighting fund?
	I also understand that those 650 new officers will be funded at only 75 per cent. of their pay costs. Will the Minister tell us what are the implications of that for the future? How can an authority budget ahead without any assurance about whether the funding for those officers will remain at 75 per cent., or be cut to 50 or 25 per cent., or even increased to 100 per cent.? There is no continuity.
	I welcome what the Minister had to say about the civilian support officers because he impliedhe may wish to retract the implicationthat he was taking seriously the point that the Opposition made during the consideration of the Police Reform Act 2002: whether to employ community support officers should be up to the discretion of local police chiefs and authorities. It is hardly surprising that he should have 1,000 or so CSOs in place and bids for many more if that is the only way to access money for any more officers of any description.
	I remind the Minister and the House that, with the exception of the Metropolitan police, not a single chief constable said that, given the option, he or she would not rather employ regular police officers than CSOs. I am sure that my hon. Friends will recall that from their own discussions. If the Minister does what we exhort him to doabolish the fund and put the money straight into the policeit will be interesting to find out how many forces decide to divert the resources back to regular officers.
	Finally, I wish to say a word or two on the new formula to which the Minister referred and the floors and ceilings. Obviously, with a new formula for the police and the adjustments to the local government formulathe area cost adjustmentthere will be gainers and losers and therefore the operation of floors and ceilings is perfectly understandable so long as it is transitional. There are 19 police authorities at the floor; 14 at the ceiling. The fact that that is well over half the totality of police authorities in this country demonstrates that considerable unevenness remains in the distribution.
	Will the Government lay out a phased elimination of those floors and ceilings; or do they intend to leave them there for ever? If they have confidence in their new formula, surely they should have the confidence to pursue its introduction. How can any authority look forward and try to plan not just for the next financial year, but for years to come without having any understanding of where it will be in future with regard to the floors and ceilings policy?
	The House has always made clear its support for the police, and I believe that the vast majority of the British public support the police, although, anecdotally, I fear that that support is reducing. However, that support will completely fail unless the police are responsive to local needs, and it defies belief that response to local needs is more likely to be achieved by the Home Secretary in Whitehall telling them what to do than by local accountability.
	The most reprehensible element of this package is that extra resources will continue to be kept to the centre. Police authorities get a 3.7 per cent. increase, but the Home Secretary gets a 20 per cent. increase on what he keeps to the centre. That belies all his protestations about centralisation; it is a command-and-control approach to policing, which is wrong.

Vernon Coaker: It would be remiss of me, as a Nottinghamshire Member of Parliament, not to begin my speech without first paying further tribute to PC Ged Walker and his family. He was murdered very recently while on duty in Nottingham. As part of this debate, we should just pause for a moment to reflect not only on his bravery, but on the bravery of all our police officers and security personnel across the country on whom we all depend.
	In welcoming my right hon. Friend's statement and discussing the grant, it is important to note that we have seen significant increases in support for our local police, not just this year or last year, but for a sustained period of improvement. That approach, in conjunction with police authorities, has provided significantly more police officers. The 5 million extra that we in Nottinghamshire will get next year will enable us to continue the improvements in police numbers that we have seen.
	I want to place on record the fact that, in 19992000, there were 2,224 police officers in Nottinghamshire, but by March 2003, there will be 2,434a 10 per cent. increase over that period. By anyone's calculation, that is a significant improvement in the number of available police officers. We already have 12 community support officers, but there will be additional CSOs because of the increase in grant. Despite that increase in grant and in the number of police officers, one of the common complaints that I hearI am sure that all hon. Members dois that people turn around and say, Where are the extra police? Where is the increased police presence on the street? Why are their calls not being answered?
	I want to make a couple of points to the Minister about increased police funding. As well as talking about the amount of grant, we need to discuss how we can improve performance with the additional money that we make available to the police. As the Minister and other hon. Members will know, one of the things that we need to do is to make local police stations much more accountable with respect to the local basic command unit statistics.
	I ask my right hon. Friend to consider another point about the police grant. Even in Nottinghamshirea close-knit countypeople in my constituency want the figures to be extrapolated so that they know what they mean for their local police station in Arnold or in Carlton. They want to know how much additional spending there will be and how it relates to fighting crime.
	I ask the Minister to consider how the grant applies to different police forces, and we also need to make sure that we measure performance. One of the ways to do that is to ensure that the figures are considered at as local a level as possible so that we hold police forces accountable for the additional grant that they receive.
	One of the things that is sometimes disappointing about debates on the policethis is a serious pointis that we inevitably get some to-ing and fro-ing about the number of police officers. We all want more police on the streets. This is a difficult point, but when we give additional grants to police forces, I ask the Minister to consider not only the number of police officers that they have on their books, but the number of operational police officers that the grant can provide. I suspect that, if different police forces were given the same amount of money, there would be significantly more police officers on the street in one area than in another.
	We need to be intelligent about this issue and to take forward the debate, and not simply argue about raw statistics and raw police numbers. Of course that is importantwe all want more police officersbut we also need to ask ourselves how one police force can get X number of police officers on the street, whereas another force cannot manage to do so even though it gets exactly the same amount of money. That may happen because of the way that different police authorities chose to use their money. That is a matter for local democracy and local accountability. However, it is incumbent on us to have a sensible debate on police officers and numbers on the street, otherwise, we will have a sterile discussion in which we bat things to and fro, which would not be particularly helpful to my constituents or the country as a whole.

Simon Hughes: I want to add a constructive suggestion. The other information that seems to be increasingly relevant is the number of new, probationary or trainee police officers. There is a huge turnover and we face an even bigger loss as people are coming up to retirement age. Many police managerscommanderswill not allow young police officers in their first two years of service to do the jobs that the others do. If we could have that profile, we would be able to see the pattern and picture of policing in each local borough command unit.

Vernon Coaker: The hon. Gentleman makes an important point. My police service in Nottinghamshire often tells me that even though it may have more officers, they are not seen on individual patrol if they are new recruits because, as part of their training, they are teamed up with other officers. That creates problems, as he says.
	May I raise a specific point with the Minister? He will know it from Nottinghamshire police's point of view, but, as a local Member of Parliament, I also want to make it. Nottinghamshire police faces metropolitan crime levelshe knows that Nottinghamshire is one of the 10 street crime initiative areasbut it is funded as a shire service. Will he respond on that particular problem and put on record the Government's view on that point, which is often made from Nottinghamshire?
	I appreciate that the Government have given extra moneynearly 1 million under the street crime initiative and 4.3 million under the crime fighting fund. I say to the hon. Member for South-East Cambridgeshire (Mr. Paice), who spoke for the Opposition, that the Minister made a good point on the crime fighting fund. If we want more police officers, one way to achieve that is through central pots of money that are granted only for spending on additional officers, although that would remove local discretion to use the money differently.
	That returns us to the point about having a sterile debate on police officer numbers. In a sense, we cannot have it both ways. People say, Money should not be held centrally if it is to be used to provide more police locally. However, if the Government devolve the money to the local level, the police authority may choose not to spend it on police officers. When that happens, Members say that police numbers are not going up. That is a difficult circle to square, although the point is an interesting one to make. I should add that the Airwave project is receiving an additional 1.13 million. There are additional moneys over and above the core budget, which is important.
	The Minister knows, however, that I receive complaints that the problems in Nottingham with shootings, drug problems and so on suck in officers from the surrounding areas. That is understandable, but sometimes it means that officers who should be deployed in my areathe suburbs and elsewhereperhaps have to be deployed to deal with more serious crimes. Will he comment on that?
	I want to make a couple of other points about the grant and the debate on policing. There is a further debate to have on paying special constables. Will the Minister comment on special constables, who make an important contribution? Furthermore, community support officers, who tackle low-level antisocial behaviour, will also make an important contribution to policing in each area.
	I am pleased with the additional grant that has been made available to Nottinghamshire police, as it has allowed the growth in police numbers to continue, which is to be welcomed. I pay tribute to the work done by the chief constable and his officers across the county in trying to reduce crime and to the police authority chair, John Clarke, for the work that he is doing. I wish them well with the increased resources that they have to tackle crime. There are real issues as to how we get more police officers on the street to reassure people and to tackle crime.
	I hope that we can debate police numbers without concentrating only on that in absolute terms. If we can do so, we will make a greater contribution to tackling crime and disorder in our communities.

David Heath: In opening the debate, the Minister repeated a truism that is worth repeatingthat we are dealing not just with crime, but with the fear of crime. Many factors underlie criminal behaviour and there are many causes of crime that we are not properly tackling. Adequate and effective policing is one way to combat not only crime but the fear of crime. And part of the answer is not only bobbies on the beat but the fear of bobbies on the beat: no legislation or exhortation from those on the Government Benches will have half as much effect on criminal behaviour across the country as the reasonable expectation of being caught and of there being the police officers on the ground who can do the job and ensure that criminals are apprehended.
	One problem when times are hard in the police service is that, inevitably and rightly, resources are focused on areas of major crime and major visibility. As a result, we lose first what chief constables, but not those whom they serve, often consider a marginal activitythe patrol function. That is why it is so important that we get the policing formulae right and that we give adequate resources to the police authorities and chief constables to enable them to make the decisions that need to be made in local areas.
	Let us be clear about the fact that the settlement is an awful lot better than some we received before 1997 under the previous Government. I have experience of that. As the Minister knows, I was on the receiving end as chairman of a police authority in those years. I remember going each year to the right hon. and learned Member for Folkestone and Hythe (Mr. Howard), who was then Home Secretary and is now Opposition spokesman on Treasury matters, to ask for more officers for Avon and Somerset. Every year, I was told, No, not a single extra officer will you get. So, I take the views that are sometimes expressed by Conservative Members with a serious pinch of salt.
	The settlement is also much better than those we came to expect in the early years of this Labour Government. One of the enduring failures of the new Labour Administration is not dealing adequately with policing and home affairs during their first few years of tenure. The belief that one could provide an adequate policing service within the constraints of the previously decided Conservative budget figures was hugely mistaken and it cost us dear in terms of its effect on our police forces up and down the country.
	I do not argue with the Minister saying that some things are sensibly top sliced from the overall policing budget to provide for central expenditure. I am a great believer in local determination and allowing local police authorities to set their budget, but I cannot see a great deal of sense in disbursing money only to collect it straight back for national procurement programmes. Therefore, there clearly are areas where the Home Office is right to retain control.
	There is a present need to respond to the threat of terrorism. I applaud the Minister for continuing to make more moneys available for that purpose, but I ask whether similar funds are made available through other Departments to other law enforcement bodies to meet that threat. He may not be able to give me an answer now, but I am concerned. Indeed, at the end of last year, I expressed my concern about the position of British Transport police, which is funded through the rail companies, and whether it has adequate funds to meet the threat of terrorist action on the tube. I have a continuing fear that Her Majesty's Customs and Excise is not being funded adequately to allow it to do an important job in protecting our borders. There is in any case a strong argument for reconstructing our border forces to make them more effective and more efficient.
	The point at which I start to argue with the Minister is when he assertsnot boasts, because he is not a great boaster as a Ministerthat in the 6.2 per cent. increase to which he has alluded he has scored a major success in police service funding. That is fine and goodit represents a success against the Treasury to some extent, because at one point the expectation was that the increase would be far less than that. However, the Minister must not confuse the British public or undermine the position of chief constables and local police authorities by pretending that that is what will go to local authorities and police forces throughout the country.
	The hon. Member for South-East Cambridgeshire (Mr Paice) noted the disparity between that which is distributed through the police grant formula and the needs of police authorities. We know that the total increase in revenue funding for police authorities from central Government is about 275 million, which is an increase of 3.7 per cent., not 6.2 per cent. as was mentioned. That sum has to cover the results of the police negotiating body formulae, so a large part is, in effect, already taken before the money reaches the police authorities. We know also that, in the light of a reasonable and sober assessment on the part of police authorities, they need 482 million simply to stand still. My experience is that police authority treasurers and chief constables are not ones to over-egg the pudding and overstate their case: they tell it like it is. The fact is that, given an inflation and pay gap of 137 million and the 70 million pensions gap, they have some difficult sums to do.

Annette Brooke: Does my hon. Friend share my concern that Dorset police authority faces increasing its share of council tax by 20 per cent. against a background of its expenditure per head of population being the second lowest among English authorities and its council tax the fourth highest, and the authority being a beacon of efficiency? What is my local police authority meant to do in the circumstances?

David Heath: I will talk about the circumstances of specific authorities and the results in terms of council tax later. I assume that my hon. Friend does not subscribe to the rather odd view entertained by the hon. Member for Christchurch (Mr. Chope), that one of the answers is to send the funds back and not recruit extra police officers. I understand my hon. Friend's point of view, but if Dorset has spare police officers whom it wants to return to sender, let it send them just across the county boundary to Wincanton in my constituency, where I will be extremely happy to welcome a few extra police officers to Somerset.

Christopher Chope: Perhaps the hon. Gentleman will admit that what he just said is a misrepresentation of my remarks. I was referring to an option that the police authority was considering, and the implications of following that option through.

David Heath: I have to say that the hon. Gentleman gave every indication of supporting that option. Perhaps he could have phrased his intervention a little better.
	Pensions are a huge problem that has bedevilled police authorities for more years than we care to remember. The Minister says that he is struggling with it and hopes to find a solution, but does he realise that I had precisely that response from the right hon. Member for Penrith and The Border (David Maclean) back in 1996, when the right hon. Gentleman was a Home Office Minister? He told me then that it would all be over by Christmasthat by Christmas we would have a paper on police pensions that would deal with the problem. Yet, as the decades pass, the problem worsens. Unless someone grasps the nettle of future pensions contributions at least to stem the tide, pensions will continue to be a huge problem for chief constables and police authorities in managing their affairs.
	Among the great problems that police authorities face we find not only the 3.7 per cent. overall increase, but the peculiar way in which it is distributed throughout the country. The hon. Member for South-East Cambridgeshire referred to the number of authorities that are on the floor and are to receive only a 3 per cent. increase. Goodness knows what they would have received had the floor not been in place; presumably, they would have had to cut their police establishment left, right and centre. However, a curious feature of that list of local authorities is how localised they are. Every single authority in the south-west is on the floorAvon and Somerset, Dorset, Gloucestershire, Wiltshire, and Devon and Cornwallas is every authority in the south-east. Nottinghamshire, represented by the hon. Member for Gedling (Vernon Coaker), might have escaped, but a fair proportion of authorities in the east midlands are also on the floor.
	It is as though the Government decided that there are enough police south of the Wash and that there are enough police to deal with crime in the home counties and the west country. However, it is not the perception on the ground that we have sufficient resources and sufficient officers patrolling our towns, cities and villagesquite the reverse. Every single one of the authorities on that list will be extremely disadvantageously affected and will face having to impose extremely high council tax increases just to stand still. We have already heard Dorset Members from all the major parties making points on behalf of Dorset, and the hon. Member for Stroud (Mr. Drew) spoke on behalf of Gloucestershire.

Richard Younger-Ross: Is my hon. Friend surprised to learn that Devon and Cornwall has the fewest police per head of population, but still finds itself on the floor? Is something wrong?

David Heath: I am not surprised, because I know that several of the authorities in which we have an interest are in exactly the same position.
	There is no objectivity in the formula. It might appear to be based on objective measures, but in terms of relating it to population or to police activity, it is grossly deficient.

John Denham: It might help the debate if the hon. Gentleman reminds me of the main points made by the Liberal Democrats in their response to our consultation on the formula. Which objective measures did the Liberal Democrats suggest during that consultation?

David Heath: First, to pick up the point made by the hon. Member for South Dorset (Jim Knight), the effect of the area cost adjustment on police authorities is extreme.

John Denham: rose

David Heath: The Minister intervened, so he must give me a chance to respond. He brushed his hon. Friend's point aside, saying that it was not a matter for him, but one for Ministers at the Office of the Deputy Prime Minister. Well, it matters a great deal to those who are trying to operate a police service, whether police authorities or chief constables, because it affects not only the funds available to them but the way in which they attract and retain officers in areas that are marginal to areas of high housing costs and high wages. Those are real problems in large parts of the country.
	I do not want the House to think that I am speaking only for the people of the west country. Let me give an example of another authority that has done badly out of the formulaDerbyshire.

John Denham: I do not want the hon. Gentleman inadvertently to fail to answer my question. What proposals regarding their preferred formula did the Liberal Democrats make?

David Heath: The Minister knows that we approach local government funding in a totally different way from the Government, so I will not respond on that basis, although it is a serious point. We could turn over the entire debate to the different ways of funding local authorities, including police authorities, but I do not think that that is the purpose of today's debate, so I will not be drawn down that route. The right hon. Gentleman has proposed this formula, and he has to answer for the effects on local authorities and police authorities throughout the country.
	The chief constable of Derbyshire, David Coleman, describes the increase as extremely disappointing. He says:
	The constabulary and the Police Authority will now be faced with some very difficult decisions as to how we maintain existing services and the potential for further growth and development in community beat policing is severely restricted . . . . I believe that the communities of Derbyshire will regard this as a bitter blow in light of the substantial progress we have been able to make in the last two years.
	That is a police authority and a constabulary that has been making huge progress in turning back from quite difficult times not so long ago. They have tried to do their best in policing a diverse area in Derbyshire and are now being hit by this hammer blow of simply not having the resources that they need to do the job. For authorities to be on the floor is not without a cost to other authorities, because the money comes not from central resources but from effectively withdrawing funds from other areas.
	One point that needs to be made, which comes back to a point that was made earlier, is that we do not at the moment have objective tests of local policing need to which the formula can respond. That is the case in shire authorities and in London. My hon. Friend the Member for Southwark, North and Bermondsey (Simon Hughes) has experience of identifying policing need in his constituency to which the Metropolitan police cannot respond.

Simon Hughes: To reinforce my hon. Friend's point, we have put to the Government a helpful suggestion that would not divide parties, which is that there should be some objective impartial advisory body, such as a standing conference on policing, or any formula that the Government would wish, whereby people throughout England and Wales could determine, separately for Wales and England, and then across the forces in each country, what the communities, on advice, believe that they need. In Southwark, three Members of Parliamenttwo Labour and one Liberal Democratthe local authority and the police, came to the view that we needed 1,000 police. We have about 750. How can we go from 750 to 1,000 if we are never given the ability to negotiate with the Government on that basis?

David Heath: My hon. Friend makes a good point. In response, I offer another, which concerns the balance between urban and rural areasthe point made by the hon. Member for Gedling. That happens when we have joint force areas. The problems of policing big cities are obvious. The chief constable makes perfectly rational decisions about the deployment of resources within his area to fight big crime, but the effect of that is to reduce to almost nothing the visibility and presence of policing in the rural and peripheral areas. That also happens in smaller shire forces, where there is a central city with a crime profile such as there is in Nottinghamshire. We have not yet adequately addressed that. That is why it is so difficult for local populations to accept huge increases in council tax for the police as a result of the formula.
	The Minister says, It's nothing to do with me, guv. It is for the local police authorities. It beggars belief that anyone would be taken in by that. It is as if all the police authorities had suddenly taken collective leave of their senses and decided to inflict huge council tax increases for no good reason.
	I do not want to embarrass the Minister with his own Hampshire police authority, but in a letter to the Home Office the Treasurer of the Hampshire police authority says:
	The Authority faces yet another difficult budget year, with the council tax likely to increase by over 20 per cent. if it is to avoid cutting current policing levels, primarily as a result of the Government's extremely damaging funding settlement.
	There has been an increase of 20 per cent. in Hampshire, 20 per cent. in Dorset and 22.9 per cent. for the Metropolitan police area. In Avon and Somerset, my own authority, the increase is 30 per cent.
	How do I explain to a person living on a fixed income, perhaps a pensioner, in a village in my constituency that they are paying 30 per cent. extra but they will not see any extra police officers because they are all going to Bristol because that is what the chief constable and the Home Office have decided is the priority? Bristol is an hour and a half's drive away and, frankly, pensioners in villages in my constituency could not give a damn what is happening in Bristol. What they want to see is police officers in their villages and streets.

David Wilshire: Perhaps I can help the hon. Gentleman by suggesting how he could give comfort to constituents who face a whopping great rise. He should just tell them that they are lucky they do not live in Surrey where we are facing a 46 per cent. increase.

David Heath: This is like an auction to see who can come up with the biggest, most extraordinary and ridiculous council tax increase.
	That clearly illustrates the problem with the settlement. It prefaces increased police resources in general and is better than the worst that could have been provided, but it suggests huge increases in council tax for very little benefit for large swathes of our population. It is lacking in transparency, fairness and real improvements and it is increasing costs. An awful lot of people will be paying a great deal more for not a lot.

Paul Truswell: I can appreciate Ministers' temptation to turn off their hearing aids when they hear the equivalent of special pleas for particular organisations or authorities, but I have two to make in respect of West Yorkshire police authority and the West Yorkshire police force. The first relates to the huge and continuing additional costs incurred by West Yorkshire police authority as a result of the disturbances in Bradford 18 months ago. I fully recognise that my right hon. Friend has already assisted with a special grant of 2.2 million, which was very welcome, but I hope that he will not regard me as too churlish in coming back once again, in Oliver Twist fashion, for some more.
	I am sure that my right hon. Friend is aware of the overall costs of policing the disturbances, but I will remind him of them nevertheless. Policing the incidents themselves and the immediate aftermath cost 3.4 million. The costs of policing the investigation, public reassurance and contingency arrangements for possible recurrences have also been substantial. They have been estimated at 4.3 million up to August 2002, and they continue to rise at a cost of around 246,000 a month.
	In addition, the police authority faces damage claims of about 7.5 million. I appreciate that the figure may reduce as a result of the usual legal and cost adjusting processes, but it still represents quite a drain on the authority. In that respect, although the 2.2 million special grant was welcome, I urge my right hon. Friend to give active and enthusiastic consideration to the case that has been put forward by West Yorkshire.
	I can accept, as can the West Yorkshire police authority, that budgeting for services such as the police, where the unexpected can and frequently does happen, requires contingency funding. It is not the Government's automatic role to ride in over the horizon with bags of money to bail out authorities that have not been prudent in budgeting for such contingencies. However, the costs to which I have referred associated with the Bradford disturbances could not reasonably have been met by even the most prudent of authorities.
	In tribute to my right hon. Friend, he has already recognised that to a degree, because 2.2 million was a significant contribution. It was not a sum that the Government were obliged to pay, but it was based on good government. He saw that there was a problem and intervened to do something about it. But that problem continues. The financial cost of the disturbances has not been contained in the period immediately following them. As I say, they are continuing.
	In West Yorkshire we are certainly not blind to all the extra funding going into the police nationally and in the county itself. We have benefited from crime-fighting moneys. This year we will receive a budget increase of 4.9 per cent., which is well above the rate of inflation. Basic command units in West Yorkshire are to receive 3.2 million, and the two divisions that serve my constituency will receive a share of about 374,000. West Yorkshire will receive 1.8 million as part of the street crime initiative; previous sums given under that initiative have helped to halve the amount of such crime since March. The force is also being funded to the tune of 60 community support officers.
	I should also like to acknowledge the grants that West Yorkshire has recently received, such as the 550,000 that was made available to the Leeds distraction burglary project, which targets the villains and conmen who callously prey on the older members of our community. We have received funding for CCTV. My constituents in Horsforth are benefiting from that, and hopefully the technology can be rolled out to other communities. That is welcome additional money in the battle against crime, and it demonstrates the Government's commitment.
	As I said, however, there is a dark lining to the silver cloud in West Yorkshire. The funding must be viewed not only against the backdrop of the pressures caused by the Bradford disturbances but against the historical funding position in the county. I have to say that unlike many other forces West Yorkshire is not enjoying a record number of officers, far from it. The authority's projected figure for the end of March is 5,080 officers, which is more than 150 below the number on the establishment in March 1997. Before Conservative Members welcome that admission, I should say that according to the police authority, the short explanation is that, first, in budgeting terms, the peak 1997 figure was not sustainable. Secondly, and here I echo the comments made by the hon. Member for Somerton and Frome (Mr. Heath), the Government took the ill-advised course of keeping to Conservative spending plans for two years.
	This year, the West Yorkshire force will recruit about 420 new officers. However, that will not represent a net increase because the figure will have to be offset against the natural wastage that occurs in so many different ways. We will still be left perilously short of the number of officers that we had in 1997. Again echoing the hon. Gentleman's remarks, as well as those of my hon. Friend the Member for Gedling (Vernon Coaker), I point out that new officers recruited at that level may represent a net loss to the force because trained, experienced officers are tied up accompanying them and are thereby diverted from the front-line presence.
	Two other statistics bear mention. The first is that West Yorkshire receives below average funding in metropolitan terms. The average figure for metropolitan forces is 156 per resident; in West Yorkshire the figure is 146 per resident. The force has fewer officers per head of population than any other metropolitan force. The metropolitan average is one officer per 363 people; in West Yorkshire we have one officer for every 425 people. That is quite a disparity.
	In a nutshell, I urge my right hon. Friend to recognise further West Yorkshire's position as regards the continuing costs of the Bradford disturbances and to view that position in the wider context that I have briefly described. It is important that the number of officers continues to grow and that resources are not diverted or distracted from front-line policing throughout West Yorkshire, including my constituency, by the continuing financial black hole created by the Bradford disturbances.
	My right hon. Friend will know that the police authority has a relatively new chairman, Melvyn Smith, and a new chief constable, Colin Cramphorn. I hope that he will see fit to greet them with a golden hello. He could dig into some of the sums available to him this year, or the many sums that he has said will be available next year, to give them a cash boost and make their job a little easier, because they face great challenges in their new jobs. I know that my right hon. Friend will do his best on that score.

Christopher Chope: This police settlement is grossly unfair, unaffordable and unacceptable to the people of Dorset. The hon. Member for South Dorset (Jim Knight), who is no longer in his place, told the Minister, in his very mild manner, that he found the settlement unacceptable and would abstain in a vote, and I commend him for that principled stand. I wish that he would go further and vote against the Government because that is the only language that they understand. Surely the Minister realises that when one of his colleagues, who won his seat at the last general election, is absolutely dismayed by the way in which his constituents, and my constituents, have been treated by what is supposedly his own Government, it is time to take note. Indeed, when Dorset Members of Parliament complained bitterly to the Deputy Prime Minister's representative about the injustice of the new system, the hon. Member for South Dorset asked how any of the authorities in Dorset could be blamed when they were commended on their efficiency. Despite that, increases of 19.6 per cent. for the police and 16 per cent. for the county council have been set. The hon. Gentleman said that he would have to blame the Government for imposing that burden on the people of Dorset.
	People in Dorset are fed up to the back teeth. The outrage is not synthetic because a high proportion of the population is on fixed incomes. Unlike us, they do not enjoy the luxury of annual increases. They have to put up with small increases in their pensions. The Minister, in a rather cavalier fashion, said that a 20 per cent. increase in the police precept in Hampshire, where his constituency is based, was perfectly affordable. How can it be affordable? He explained that it was only 9 a head.

John Denham: I am sure that the record will show that I made no comments on the Hampshire precept or what it would cost.

Christopher Chope: I hope that the Minister will have an opportunity in his short winding-up speech to explain what increase he would consider acceptable in the police precept in Hampshire and whether he believes that a 19.6 per cent. increase is acceptable in Dorset.
	The people of Dorset earn some of the lowest average wages in the country. Dorset is 25th out of 32 county council areas, yet the people face the highest per capita contribution to the costs of policing and highest percentage of police costs in the country. That is why there is so much pressure on them. They want to know why they have to finance the increases when they already pay more than the people of London towards the costs of policing. They are told that they live in a safe area, are responsible, participate in neighbourhood watch and support the police. The police tell the people that they need to increase the precept by 19.6 per cent. to maintain the service.
	At a meeting with the chief constable, I asked how pensioners could cut their expenditure to afford such increases. She was unable to answer the question. Perhaps the Minister will explain how ordinary residents in Dorset can cut their living expenditure to afford the extra charges to which Government policies lead. Through a stealth wealth tax, the Government are redistributing resources from areas that have high house prices and low wages to other areas where the needs do not warrant such redistribution.
	What does a council or police authority do when such circumstances arise? A business would examine its costs and consider what could be cut. As I tried to say in my intervention on the Minister, one of the options for Dorset police authority is to consider staffing. Its additional costs include the 1 per cent. increase in employer's national insurance contributions and a substantial increase in pension requirements.
	The police authority could cut all overtime; that might save approximately 1.7 million. It could freeze recruitment. If it did that, it would suffer double jeopardy, because the Minister would withdraw money from the crime fighting fund that had previously been given to Dorset. He confirmed that in his response to my intervention.
	Far from giving police authorities freedom to determine matters for themselves, the Government bind them completely. If they try to exercise freedom to reduce their costs and thereby the burden on their local population, they get a double penalty from the Government, who will withdraw specific funds that they had previously made available.
	All that reinforces the strong argument advanced by my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) for our belief that it would be much fairer for the Government to decide how much to allocate to police authorities and then let them decide how to spend it. At present the Government are giving more and more money to themselves, withholding police authority money and then handing out that money in donations for which they expect local people to be grateful. They are distorting the balance of police expenditure, and imposing on police authorities an enormously wasteful process of bidding for the available funds. We in Dorset are notoriously unsuccessful in securing the extra money.
	We are in a desperate situation. I hope that when the Minister visits Bournemouth for his party conference he will see at first hand local police officers' dismay at the intolerable pressure to which they are subject. They are having to tell local people We want more money. The people say We cannot afford it. Meanwhile, the police are under enormous pressure to provide and improve services. As a result, disillusionment with the police is increasing phenomenally.
	The Minister will have seen the latest Home Office figures. They reveal that public confidence in the police is declining rapidlypublic confidence in their ability to control the yob culture, and in their ability to clear up crime. The fact that the police are being required to increase local taxation to such an extent while not being able to improve services will only increase the disillusionment that I have described.
	Today the Government produced a report entitled Sustainable communities in the South West. According to page 5,
	The South West suffers the double impact of higher than average house prices and lower than average incomes in the region. This creates particular difficulties for key workers and young people starting outparticularly in hotspots such as . . . East Dorset . . . the average house price in . . . the South West . . . was the second highest for any region in England, and the cost of housing is higher, in terms of percentage of income, than anywhere outside London and the South East.
	Below is a diagram showing that in my constituency the ratio of lower quartile house prices to regional lower quartile income is more than 7.5 per cent. That is the problem we are experiencing in Dorset, and despite the strongest possible representations to the Government they seem unwilling to listen or respond in any positive way.
	We are angry in Dorset. We want to do more than just vote against the grant settlement. I am delighted that an all-party group of MPs is campaigning for a fair deal for Dorset.

Wayne David: I welcome this positive statement, but as a Gwent Member I must express some disappointment. For some time Gwent has been disadvantaged by the funding formula, and Gwent police and Gwent Members had hoped for a significant improvement in 200304. Gwent's chief constable agrees.
	Gwent's police force, like others, faces a number of unavoidable cost increases. Increases related to pension requirements, larger pay awards and larger national insurance contributions loom on the horizon. Moreover, Gwent wants to introduce a new communications system for its officers, which is bound to prove expensive. However, it is important to stress that, in addition to such costs, Gwent police will face new demands as a result of the introduction of the Government's legislation. We all welcome that legislation, but nevertheless it has severe cost implications.
	We also need to acknowledge the fact that Gwent faces considerable social deprivation. Some 60 per cent. of the Gwent area is classified by the European Union as objective 1: in other words, its gross domestic product is less than 75 per cent. of the EU average. That means that much of that area has acute social problems. Unfortunately, antisocial behaviour is increasing dramatically, and there is an increase in drug-related crime. For example, in certain communities in my constituency, as many as 90 per cent. of house burglaries are related to drugs and the need of those who are dependent on them to have the income to fund their habit. The Minister must take these problems into account in coming to a fair and just settlement.
	For many of the people whom I represent, increasing the number of police on the streets is the acid test of whether the fight against crime is succeeding. Extra resources are needed, and if they are not forthcoming, there will be no alternative to a very large increase in council tax precepts. The figure of 26 per cent. has been mentioned, and it is unrealistic. It is an unacceptably large sum to ask of council tax payers in an area such as Gwent. Moreover, such a scenario is doubly unfair on Gwent police authority, because it is one of the best performing authorities in the country. I believe that success should be rewarded, not penalisedan argument that is strengthened when we consider the authority's success over the past couple of years or more in tackling crime and improving efficiency levels.
	I want to take this opportunity to highlight a particular demand that is being placed on the police. Torfaen is inside the Gwent police area, and its MP is my right hon. Friend the Member for Torfaen (Mr. Murphy), who is also Secretary of State for Northern Ireland. We all welcome that fact, but being an extremely conscientious constituency MP, he rightly spends a fair amount of his time there, which has policing implications. The Gwent police force has made representations to the Home Office on that very point, but they seem not to have been taken into account in calculating resources for the area.
	As the hon. Member for Brecon and Radnorshire (Mr. Williams) said, certain quarters in Walessignificantly, that includes all four of its chief constablesare demanding that policing become a devolved responsibility: in other words, they are arguing for a major extension of the devolution settlement. Personally, I have an open mind on the matter. We need to look at the pros and cons in an objective and detached manner, and to work out what is the best way forward. However, it is worrying to note that the four chief constables are now in favour of an extension of devolution so far as policing is concerned because they are not satisfied with central Government's funding arrangements. That issue has to be addressed.
	There is no doubt in my mind that policing is becoming more effective throughout the country, and particularly in Gwent. Crime detection levels are improving, and the problem of high absenteeism is being tackled firmly. Savings are also being made in other areas. The Caerphilly and Blaenau Gwent divisions are being successfully merged, which is freeing up resources and, in effect, allowing seven extra police officers to go on the beat. That is warmly to be welcomed.
	I return to the point that I made earlier. We can talk about statistics and trot out figures, but many people come to a judgment on whether policing is improving on the basis of what they see happening in their local communities, and the perception in many of the communities that I represent is that crime is still a problem and that antisocial behaviour, in particular, is increasing. The Government are focusing their legislative programme on tackling those problems. However, it is not just about having the laws or the willpowerwe need the resources to back them up. That is why, although there is much in the settlement that I welcome, there is certainly room for improvement as far as Gwent is concerned.
	Finally, will the Minister look again at providing extra resources to allow for adequate policing to take into account the security of the Secretary of State for Northern Ireland when he is in his constituency? That is a justifiable demand, and I hope that he will take it seriously and consider it carefully.

David Wilshire: I listened with great care to what the Minister had to say in the hope that I could tear up this speech, but unfortunately, I heard nothing new. His comments this afternoon and the figures that he finally produced this week are exactly the same as those that he used when he launched his consultation exercise. It is now crystal clear that all the representations made by my community, all the meetings that we held and all the pleadings that we made have been ignored. It is now crystal clear that screwing Surrey is Government policy. What is going on as far as my county is concerned is a disgrace, and the Minister should be ashamed of himself.
	Surrey has the worst settlement in the country. I am not going to get into a bidding war, because we just went down that route. The new system of which the Minister is so proud has savaged Surrey's grant. Without the floor of which he is so proud, we would have lost 14.6 million. That does not mean that we would not have got an extra 14.6 million, but that we would have got 14.6 million less than we are getting in the current year. Let me spell out to the Minister what that means. My hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) said that in due course the Minister will phase out these transitional arrangements. If he does not implement the new formula, what is the point of having it? When the transition ends, the 14.6 million savaged from Surrey's budget meansI am quoting the chief constablethat there will be between 450 and 500 fewer police officers. That is a 25 per cent. reduction in the police officer strength of the Surrey police force. If the Minister wants to dance to the Dispatch Box now or when he winds up to say that Surrey has more police officers than they used to have before his dreadful Government came to power, let me remind him that that is because of the addition of one whole division from the Metropolitan police. So he cannot crow about extra numbers. If he carries out his policy, we will lose 25 per cent. of our police officers. That is what his new grant system means.

John Denham: indicated dissent.

David Wilshire: The Minister might well shake his head, because he ought to be ashamed of what he has done over the past five years. The threat to cut a quarter of the strength of my county comes on top of a cut in real terms of 14 per cent. over the past five years. At least the Minister is consistenthe is continuing to savage Surrey police, and I hope that he is ashamed of himself.
	The Minister does not like it and will try to dispute it, but I am only giving him the facts. Even if he wants to ignore all that, let us talk about his wonderful, generous 3 per cent., of which he is so proud and wants people to think is helpful. It is not. Let me tell the Minister what that really means in Surrey. Again, I quote the chief constable and the police authority. Earlier, the Minister said that all the wonderful new conditions and pay are fully funded. Not in Surrey, they are not, according to the police authority. The authority has additional costs of which the Minister has not taken account. The national insurance increase is not funded either.
	Moreover, I am told that, in Surrey, the increase that has been agreed for next year will amount not to 3 per cent. but to 1.4 per cent. only. That 1.4 per cent. will have to cover the national insurance increase, the extra pension costs, and inflation. I am not a maths genius, but funding all those costs with a 1.4 per cent. increase seems to me to amount to a real-terms cut in the money that the Government give to Surrey police.
	Even that is not enough to get the Government to see sense. Police forces in the south-east face cost of living problems that the Government refuse to acknowledge. In the current year, Surrey will lose 14 per cent. of its police officers.

John Denham: The hon. Gentleman says that the Government refuse to acknowledge problems with the cost of living, but what is the additional cost of living allowance paid in Surrey today? What was it under the previous Government? I think that he will find that there was no such allowance previously.

David Wilshire: The Minister goes round and round that particular course. I have been in a meeting with him when I and other hon. Members explained that no account was being taken of the fact that the Surrey force and other forces in the south-east were losing officers to the Metropolitan police, and elsewhere.
	This year, Surrey police will lose 14 per cent. of its officers to other forces. That will cost another 14 million on top of all the other problems that it faces, and the Government will do nothing about it. The cost of the formula change, of the underfunding of the increased costs, of inflation and of losing staffwhich the Government do not acknowledgeadds up to a problem for the Surrey police authority. If the authority is to deliver exactly the same service that it delivers at the momentand whether that is adequate for the community's needs invites a range of questionsit will cost 13.7 million more than it gets from the new grant and last year's precept.
	When the Minister replies to the debate, will he tell my constituents which course of action he prefers? Should Surrey police authority cut the service that it gives because the Government will not fund it, or should it raise the precept by 46 per cent.? That is what it will cost to maintain the status quo.
	The Minister looks glum: well he may, but I sincerely hope that he has the guts to give my constituents the answers that they want.
	I am a realist. I know when I am screwed by the Government, as do my constituents. We understand that the Government could not care less about Surrey, and that they will make the cuts whatever we say. However, does the Minister ever have a pang of conscience in a quiet moment? If so, I have a few suggestions for him as to what to do.
	Let the Minister prove me wrong about his not wanting to help with costs in the south-east. Let him stand up and say that he will do something about the matter. Let him stand up and say that he will use some capital money to make it possible for us to make loans to police officers, so that they can buy houses that they otherwise could not afford. Let him say that he will help us to make transport freely available to police officers, as happens in the Metropolitan police. Let him say that he will impose disincentives on other police forces that raid the Surrey strength for their own endsthat is, saving on training costs.
	For my constituents, the statement is catastrophic. It contains nothing to be pleased about at all. It means one of two things: a cut in our policing or a 46 per cent. increase in the precept. If the Government do not repent, it will, in due course, mean 25 per cent. fewer officers, in addition to the present cuts.
	The reality of the settlement is the opposite of Labour's slogan, Tough on the causes of crime; the settlement is tough on the Surrey police and even tougher on the victims of crime.

Nigel Waterson: I am glad to have the opportunity to take part in this short debate.
	Crime and antisocial behaviour are overwhelmingly of priority concern to my constituents, as was shown by a survey that I carried out recently. My constituents, like people throughout the country, were horrified and appalled by the new sentencing policy for so-called first-time burglars. My constituents have strong views on such issues, as well as an unshakeable belief that greater numbers of police officers on the beat are a major way of tackling crime and antisocial behaviour.
	I am participating in the debate mainly because on 20 January I asked a question at Home Office Question Time, but received such an inadequate response from the Under-Secretary of State, the hon. Member for Leeds, Central (Hilary Benn), that I immediately made a point of order recording my intention of raising the matter on the Adjournment of the House. As I have been unsuccessful so far, I thought that this debate would be a good opportunity to make the points that I wanted to make.
	The Government are, in essence, giving with one hand and taking away with the other. Whatever the figures for extra funding, they are totally dwarfed by the 9.6 million loss that the Sussex police authority calculates will arise from the changes to grant distribution and calculation. That will make an enormous difference to policing in Sussex and the Minister for Policing, Crime Reduction and Community Safety should be aware of that. Perhaps he cares as little about Sussex as he does about Surrey, but he should be aware of the consequences of the settlement.
	The non-answer that I received from the Under-Secretary on 20 January obviously so embarrassed him that he wrote to me on the very next day to try to set out the figures for grant and other funding for the Sussex police authority. To be fair, there will be additional moneys for Airwave, capital funding and other things that have already been mentioned in the debate. The Under-Secretary informed me that the Sussex police authority
	will receive 153.10 million in general grant . . . an increase of 4.5 million or 3 per cent. over 2002/03.
	I shall deal with that point in more detail later.
	The letter ended, however, by complaining that the precept level in Sussex
	remained one of the lowest in England and Wales.
	In other words, there was a clear invitation to the Sussex police authority to make a sharp increase in its precept for the coming yearas if the local government settlement was not enough to contend with.
	We have already heard that, because of the so-called ceiling, about 17 police authorities received less funding than would have been allocated under the needs-based formula. More than half the mythical 6.2 per cent. increase in funding will be allocated by central Government, as my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) pointed out. It is appalling for the Government constantly to mouth the words decentralisation and devolution while, in reality, through the Home Office, they are centralising more and more power over policing in Sussex and elsewhere.
	Revenue funding from central Government for investment by individual police authorities will increase by only 275 million, or 3.7 per cent.which is somewhat lower than 6.2 per cent. That 275 million includes the money that the Government are making available for implementation of the Police Negotiating Board agreement. We knowbecause the police authorities tell usthat their revenue expenditure will have to increase by more than 482 million just to stand still.
	There is a real funding gap. It is driven by inflationary and pay pressures, which alone produce an actual requirement of 137 million more than the increase in total standard spending, and by the rising cost of pensions, which will add a further 70 million to police costs.
	In a letter of 10 January, David Rogers, the chair of Sussex police authority had this to say to the Deputy Prime Minister:
	It is ironic that for the new round of the Crime Fighting Fund, the Authority is expected to meet 25 per cent. of the costs of extra police officers from a core funding increase that cannot support the cost of existing levels of staffing.
	He goes on to say that things are made more difficult for Sussex because the authority has taken on board the views of my constituents and other residents in Sussex and decided to respond to those concerns and increase the number of officers.
	It was not always thus. The previous chief constable had other priorities, but Ken Jones has made it clear in his relatively short time as chief constable that he believes to an extent in what I callthis is not his phraseold-fashioned policing and certainly has a view about the number of police officers enforcing the law. The view of the residents has been reflected in the actions of the police authority, yet as the letter from Councillor Rogers says:
	Sussex only received the minimum increase of 3 per cent. This undervalues and undermines the role of police authorities in tackling crime and the local contribution made towards the achievement of government targets.
	He is saying that the Government are hampering Sussex in trying to meet the Government's targets.
	Councillor Rogers goes on to say that the methodology will
	have a severely damaging impact on Sussex Police. The underlying impact of the grant distribution changes is a loss of 6.4 per cent. or 9.6m compared with the average funding increases for all police authorities.
	He concludes:
	The problems being experienced with the settlement this year are likely to worsen in 200405 and 200506, given that the national spending increases are estimated to be lower and the transitional protection from grant losses will be phased out.
	Perhaps even more pointed are the comments of the chief constable, Ken Jones. He said in a letter to me of October last year:
	At a time when there is a clear public demand for more police, we will need to recruit in the region of 250 new officers over the next three years, just to replace those that are due to retire. Sussex Police is on course to achieve our target of 3,100 police officers by the end of this financial year
	I might point out that that was the number of police officers in 1997
	but any standstill in our funding would be extremely damaging and set back the gains that we have made as a Force over the past year.
	The chief constable of Sussex says that his target is to return to the number of police officers that we had when the Conservative Government left office. One might think that that is a modest target, but at least it is a target. He also says that his ability even to reach that modest target is being significantly hampered by this settlement.
	The other day, I went out on patrol with the community street wardens who were introduced in Eastbourne under the initiativeI welcomed it at the timeof the then Conservative-controlled borough council. I was very impressed by their dedication and local knowledge, but coverage of the patrol in the local newspaper provoked quite a lot of mail from constituents. Most of the comments were along the lines of We never see them, There should be more of them and Why don't we have them in our area? The key was always to avoid raising expectations about what a difference those wardens could make to tackling criminality and antisocial behaviour. They do have a role, but my constituents are bright enough to recognise that such wardens are no substitute for the real thing: plenty of trained police officers on the beat.

Elfyn Llwyd: At its conference in Bournemouth last year, the Police Federation told me in no uncertain terms that one of the police's biggest problems, which has been mentioned already, is the endless paperwork. I urge the Minister and his officials to work closely with the Police Federation to cut the amount of needless paperwork that prevents police officers from doing what they do best out on the beat. I understand that the statutory requirements in the Police and Criminal Evidence Act 1984 and elsewhere are unavoidable, but much of the paperwork could be done away with. That should be a priority.
	Not so long ago I had a meeting with the Minister. One of the main points that I made was about the rural grant remaining at a standstill this year. Standstill is not acceptable to police forces that have to rely on the rural grant. The grant does not take into account inflationary rises, fuel price risesthe current ones and the drastic ones that we are likely to face in the coming monthsthe added cost of servicing high-mileage vehicles in rural areas and the huge insurance hikes since 11 September. All those factors are relevant to the rural policing grant, yet none of them has made any impression on the Government.
	This is one of those areas of financing in which sleight of hand always appears. In some areas, the 6.9 per cent. comes down to 3.3 per cent., and in other areas, such as north Wales, to 4.65 per cent. We have already heard about the 3 per cent. floor; in north Wales, the net amount being announced is less than the 3 per cent. floor. Central grants are insufficient to meet even standstill costs, and will inevitably resultas we have heard from Members on both sides of the Housein high council tax increases. We all know, however, that the demands on policing activity are increasing. There is a strongand correctdemand from the public for community-based policing. That, too, is not recognised in the central funding.
	There are faults in the North Wales police authority settlement. For example, security measures for Holyhead and Mostyn portsPFI costs have been incurredhave not been included in the figure. The authority's increase is, in effect, only 2 per cent. Any fool can see that that is well below the 3 per cent. floor figure.

John Denham: indicated dissent.

Elfyn Llwyd: The Minister shakes his head. I do not want to bandy figures in the Chamber, as that would be inappropriate. Undoubtedly, he will write to me at some point. If I am wrong, I will accept that I am wrong.

John Denham: The hon. Gentleman is right in one part and wrong in the other. If I can, I will deal with his points when I sum up; otherwise, I will write to him.

Elfyn Llwyd: Okay. I am a living curate's egg.
	My point is that grants are insufficient. A complication with the Welsh police forces is the interaction with the National Assembly for Wales. That may be where the grey area lies, I know not.
	The position in north Wales is serious. As I say, the grants are insufficient. Nationally agreed pay rises will amount to 3.1 million; police reform costsimposed on the police authority by recent legislationwill amount to 1.8 million; national insurance increases will amount to 600,000; increases because of general inflation will amount to 300,000; and pensions will amount to 800,000. All in all, an increase of 8.4 per cent. is required just to stand still. When that is compared with the 4.6 per cent. that is being offered, anyone can see that there will be a squeeze somewhere. The likely impact of trying to stand still will be a rise of 23.9 per cent. in council tax precept. That will come on top of recent increases.
	North Wales is a very good police authority that performs very well. Arrests last year increased by about 20 per cent. and detection rates and public satisfaction also increased significantly. It is a good police force and it wants to continue to police well, but it does not see how it will be able to do so if that means having to slam the council tax payer with an inordinate demand year on year.
	There is a high demand for community policing. The crime fighting fund has been useful; it would be churlish of me to say otherwise. A total of 103 community beat managers are in post. I hope that that will continue. However, that would probably mean an increase in band D levels of about 31.5 per cent. That is a staggering figure, although not as bad as some that we have heard today. I urge on the Minister root-and-branch reform of the way in which police forces are financed.
	The Minister's announcement about the recent increases for the Dyfed-Powys and South Wales police forces is welcome. I am sure that the increases will make a significant difference for those authorities, but I again plead the case of the North Wales force. According to my figures, it will receive well below 3 per cent. If I am right, there is a case for taking a similar approach towards the North Wales police. Perhaps we can discuss that at another stage.
	Dyfed-Powys police will be satisfied, to a certain degree, with today's announcement; it goes part of the way to addressing its problems. The implementation of the Police Negotiating Board agreement will cost the authority 1 million, and the cost of police pensions in Dyfed will increase by 590,000a substantial sum. It is probably the same for every authority, but a standstill grant under the rural policing fund hits a rural authority such as Dyfed-Powys a bit harder. I met the chief constable of Dyfed-Powys on Monday, and he was very concerned. I am sure that today's announcement will allay some of his fears.
	South Wales police force says that it has fallen below the figure of 3 per cent., and the Minister has recognised that today. It was talking of a 15.2 per cent. increase in police precepts, but I hope that that will not now have to happen.
	The hon. Member for Caerphilly (Mr. David) referred to Gwent police. To say the least, he was not exactly jumping for joy at the settlement offered to his authority, which will receive an increase of 4.86 per cent., or 3.8 per cent. in real terms. It will face unavoidable increases in costs of 9.3 per cent. and they will probably result in an increase in the band D charge of 26.23 per cent.
	The argument runs that, if we want local policing, we must be prepared to pay for it locally. However, I am afraid that that argument is somewhat disingenuous, because all these costs are being slammed on the council tax payer at the same time as UK-wide initiatives are being thrust on authorities. We also know what costs have been incurred as the result of recent legislation. I urge the Minister to reconsider the way in which local authorities are financed. It is done by sleight of hand, and it is unfair for council tax payers to have to bear all the burden if extraneous factors mean that added costs are thrust upon local authorities.
	I refer to what was said by the hon. Members for Brecon and Radnorshire (Mr. Williams) and for Caerphilly. I am the son of a police officer and the brother of a serving police officer and I know that they are perhaps not the most radical people; they are sometimes conservative. However, when four chief constables from Wales say that it is now time to devolve responsibility for policing to the National Assembly for Wales, that means something. They do not normally man the barricades and protest with we mad nationalists, but they have come to the conclusion that the present position is unsatisfactory. There is always this sleight of hand and a time-consuming struggle between one authority and another and between local authorities and the central authority. The National Assembly has also been introduced into the formula.
	If chief constables are making that argument, there must be reasons for it. I fully endorse their view, and not just for political reasons; there are common-sense reasons, too. With respect to the Minister, the settlement that has been announced bears no relation whatever to the way in which it has been spun.

Andrew Lansley: I am grateful for the opportunity to contribute to the debate. Almost annually, major criminal justice Bills occupy much of the House's attention. In fact, this week, a Standing Committee is debating this Session's Criminal Justice Bill, the purpose of which is to add to sentencing policy and to reform it.
	I entirely agree with my constituents. They regard the achievement of greater success in the fight against crime and in providing reassurance to the public as resting to a greater extent on the level of local policing and on the effectiveness of local police forces than on the criminal justice system and the level of sentencing. They probably attach more importance to criminals being caught than they do to the length of any sentences that may be imposed. The issue therefore does not deserve scant parliamentary attention. It deserves substantial attention, if not today, then as we proceed.
	My hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) talked about our policy, to which I shall return in a moment. When we consider policy in future, I hope that we will not talk about criminal justice policy primarily in terms of sentencing policy but in terms of policing policy and the effectiveness of policing.
	When we debate the police grant report, we tend to focus on financial matters, and I am afraid that I am no exception. Like my hon. Friend the Member for South-East Cambridgeshire, I do not want to pass up the opportunity to express Cambridgeshire's appreciation for Home Office support. The costs involved in Operation Fincham and dealing with animal rights protests are ongoing, and I hope that Home Office Ministers will continue to be helpful in meeting those costs. If the university of Cambridge was permitted after a planning appeal to go ahead with the construction of a neurological and behavioural centre at 307, Huntingdon road in my constituency, the Cambridgeshire police would, I suspect, have a job maintaining public order, which would be expensive without Home Office support. There has been full support for their efforts at Huntingdon Life Sciences, and I hope that there will be similar support at the new centre if required.
	One thing I do not want to be in this debate and the following debate on local government finance is churlish. When I came to the House in 1997, my first Adjournment debate was on the area cost adjustment, and I bored for Britain on the subject until we got this year's settlement, when Cambridgeshire was finally included in the area cost adjustment. It is simply not the case that the Members speaking in the debate are those whose police authority has received a grant increase at the floorCambridgeshire has received a grant increase at the ceiling of 4.9 per cent. or 3.4 million, which is a direct consequence of the change in the distribution formula and the inclusion of Cambridgeshire in the area cost adjustment, even if it is offset by the changes in resource equalisation and so on.
	Curiously, that demonstrates the effect of distributional factors. Last year, Cambridgeshire police authority was at the floor, but is at the ceiling this year. The way in which the Government distribute grant has a substantial impact on our ability to fund local policing. I am afraid, however, that we need to consider more than just the distribution of grant, welcome as the change in the area cost adjustment is. We must also consider the costs that must be met. By way of illustration, in the coming financial year Cambridgeshire police must meet increased costs of 665,000 on pay; 908,000 in relation to the changes in the Police Reform Act; 1.472 million in pension changes; and 676,000 in costs for support staff, pay, allowances, national insurance and so on. Those sums total 3.7 million, including 500,000 for the increase in national insurance alone. That 3.7 million is more than the increase of 3.4 million in Government grant.
	One or two Members, not least my hon. Friend the Member for Eastbourne (Mr. Waterson), alluded to the curious fact that, in response to parliamentary questions put to Ministers since the announcement in early December, the Home Office claims to have made no estimate of the impact of pay and pension changes on police authorities and the police service when deciding the level of grant.
	It is as if the Home Office were operating in a vacuum, where its decisions in respect of pensions or the Police Negotiating Board are extraneous to the distribution of grant. They should not be; they should be integral to it.
	Police numbers, of course, are what this is all about. In Cambridgeshire, the police authority will have to absorb all those costs and make substantial savings elsewhere in order simply to maintain the level of policing. I should say the number of officers rather than the level of policing, because one reduction may well be in police overtime.
	Maintaining police numbers is definitely what it is about. What is frustrating me and others in Cambridgeshire is that last year, for example, the Government would have claimed that they were adding police officers there, because the crime fighting fund was funding a specific level of officers; but in practice the only way in which the number of police in Cambridgeshire could be supported last year was through a 40 per cent. increase in the local precept. If there had been anything less, not only would the money not have been available to support the number of police, but the position would have been worsened, because the Government would have started taking money away from the crime fighting fund, so there would have been a progressive deceleration in funding but for that increase in precept.
	The idea that local representatives determine the level of resources devoted locally to policing was a complete fiction last year. Such resources were essentially determined by the structure of the Government's support and the structure of the crime fighting fund. Even this year, in the light of the increases in costs, and notwithstanding the reductions in expenditure, including reducing overtime, deferring capital expenditure, not replacing vehicles and so on, we are looking at a precept increase of perhaps about 16 per cent. simply to retain the present level of policing.
	I said that I would return to the question of future policy. In the country areas, including parts of my constituency, which has part of the city of Cambridge but consists substantially of country areas, we pay a great deal for policing. We understand that because of the relative levels of policing a great deal of the effort goes into Cambridge city or Peterborough, and not necessarily into the country areas. We have 16 more community beat managers, but we are still paying much more for policing than for anything remotely approaching the level that we see.
	We do not begrudge the amount that follows intelligence-led policing, which seeks to identify where crime is and addresses that problem. At the same time, we want reassurance for people who are paying an increasingly substantial proportion of the total police budget, paying absolutely higher levels of precept to their police authority, and who are looking for something to be provided in their area. I want them to have that provision.
	If my hon. Friend the Member for South-East Cambridgeshire is contemplating policy changes in the future, he should consider, building on the present level of policing provided by the police authority directly to the chief constable, an additional level. Through a local precept, local communities could provide for a parish constable who would meet their area's policing objectives, while not always being operationally available for the rest of the police service. That would not detract from what is available to the chief constable, but would add to it. It might cost no more than 10 or 20 per household.
	Frankly, when it comes to it, we in this place and locally are about priorities. This is a priority. We must be prepared to find the resources, even if necessary through local precepts, in order to make that happen.

Roger Williams: I am grateful for the opportunity to contribute to this debate.
	The hon. Member for South Cambridgeshire (Mr. Lansley) said that policing was a priority. It is certainly a priority for my constituents. Crime and the fear of crime are one of the most important issues facing hon. Members. It is significant, too, that in a short debate three hon. Members from Wales have wanted to take part because of the concern about the settlement in Wales. The headline figure of 6.2 per cent. seemed very encouraging when it was announced, but the average figure of 3.7 per cent. for police authorities is not so encouraging. The base figure of 3 per cent. for, I think, 19 authorities was very discouraging.
	The Minister announced today that there would be some added support for the Dyfed-Powys and South Wales police authorities. That is very encouraging, but we will have to consider the detail of that announcement. Before Christmas, we were encouraged when he announced that he had saved the rural policing fund. He is now trying to claim credit for retaining that fund, but the Government's initial intention was to lump it in with all the rest of the funds so that the money would be distributed by the same formula. At the time of the announcement, I said that the money would improve funding in Dyfed Powys, but that we did not know whether it would solve the problem. It certainly did not do so.
	Three hon. Members from Wales have contributed and all of them mentioned that the four chief constables in Wales have concluded that there is an argument for devolving police powers to the National Assembly for Wales. That surprises me, as I first mentioned the subject about a year ago, but at that time, none of the chief constables took that view. There is an argument for devolving the powers, but operational issues should be taken into account as well as funding ones. There is great co-ordination among the different police authorities in Wales, as well as across the borders with authorities in England. In the Dyfed-Powys police authority area and my constituency, relationships with West Mercia in particular are very good.
	While my constituency and Dyfed Powys generally are not a high crime area, people have concerns about crime. It is estimated that more than 12 per cent. of crimes in the area are committed by travelling criminals. Such people travel a long way to reach the area because it is isolated and sparsely populated and they see opportunities to commit crimes that they think would be more difficult in other areas. However, the clear-up rate of the Dyfed-Powys police authority is absolutely superb. The fact that that rate is so good is a huge deterrent for criminals who believe that they can commit crimes in the area.
	Before the funding announcement was made we were very concerned, as the initial 3 per cent. increase would not have covered even the Police Negotiating Board agreement, the pensions issue and national insurance, all of which have been dealt with in great detail in this debate. There was a clawback of 21 million from the Assembly in the Home Office Welsh policing fund transfer. Although that was mitigated to some extent by the transferral of 8 million from the Office of the Deputy Prime Minister, it meant that police authorities in Wales were receiving considerably less from the Assembly this year than they received in previous years.
	The costs of pay and price inflation, increased superannuation and increased insurance, which have all been mentioned, as well as statutory compliance issues and the fact that we live in a nation that is obsessed with litigation and taking action against public authorities, would have meant that the authority needed to raise 5.4 million to maintain the same standard of service. It would have wanted to improve services. Indeed, it sought more resources to combat drug and gun crime, domestic violence, child abuse and child pornography. It appears that those services will be on standstill this year, instead of making progress. In terms of personnel cuts, that deficit would have resulted in the loss of more than 200 officers. Obviously, no police authority would countenance such a situation.

John Denham: I must make it clear that the 5.1 million that I have announced today is exactly the same money that I said before Christmas would be provided to ensure that the floor was 3 per cent. I do not want to give the impression that there is an additional announcement today because I would get into deep trouble later.

Roger Williams: I am very glad that the Minister made that clear because he certainly would have been held to account later, but the points that I am making still stand very strongly.
	The hon. Member for West Carmarthen and South Pembrokeshire (Mr. Ainger), who is sitting with the Minister, is involved in the Dyfed Powys area, and he will be pleased to know that our constituents will face a 28.2 per cent. increase in their council tax police precept. Council tax is a very nasty, regressive form of taxation that bears more severely on the poor and less well off in our society, so they will bear the cost not of improving policing, but of maintaining the same policing as before.
	I recently joined some of the police in my constituency in Knightona relatively remote community. Two policemen were on duty, serving a 20-mile radius where two public events were held that night at different locations. I went on to Llandrindod Wells, and was present when the shift changeover briefing took place. I was very impressed with the policing, but there were no policemen on duty in another community about 20 miles away, where another public event was taking place. So we cannot say that we are over-policed, and we will certainly want to return to that issue.
	In the past few years, we have seen an improvement in the service that we receive, but I am sure that this settlement and today's announcement will do nothing to increase people's confidence that that improvement will continue.

James Paice: With the leave of the House, I shall respond to the debate. I am glad that all those hon. Members who wished to speak could do so and that we find ourselves with plenty of time. I will give the Minister plenty of time, so that he has no excuse not to reply to all the issues raised during the debate. I am surprised that there was rather a dearth of Labour Members speaking. [Interruption.] The Minister holds out his hands as if to accept that they are all happy. One would have thought that they could have found two or three from their vast ranks to say that they were happy; or perhaps they have all been lent on so much that, with a few notable exceptions, they were persuaded not to express their concerns about the proposals.
	The hon. Member for Somerton and Frome (Mr. Heath) said, quite rightly, that some top slicing is acceptableof course it is. Giving out money simply to take it back for central services, such as the National Criminal Intelligence Service, is clearly sensible. The concerns that I expressed in my opening remarks were very much aimed at those areas where money is kept back by the Government to be sent down the line, but only if it is strictly spent according to the way that the Home Secretary wishes it to be spent.

Andrew Lansley: Does my hon. Friend agree that one of the legitimate purposes of top slicing expenditure and holding it at the centre might be, for example, so that no ceiling has to be applied to grants? Some 2.3 million extra would have been available to Cambridgeshire police servicethis affects him and meif the ceiling had not been applied. Top slicing would have allowed that to happen without necessarily prejudicing the position of those who are subject to a floor, thus protecting them.

James Paice: As my hon. Friend knows, speaking from the Dispatch Box slightly constrains one from going too far down the road of one's self-interest, but I understand, and of course support, the point that he makes. In fact, it reminds me of another concern.
	Much of today's debate has been about the council tax rises, which the Minister studiously avoided, although I hope that he tells us in his concluding remarks the Treasury's expectation of the general council tax rise resulting from the settlement, notwithstanding, quite rightly, that the final decision must lay with individual police authorities in terms of their precept. As we heard from my hon. Friend the Member for Spelthorne (Mr. Wilshire) in particular, there are those that face swingeing penalties or cuts in their money. People may also face a 46 per cent. council tax increase. Increases of 10 to 20 per cent. seem commonplace to me, and there are certainly several above that.
	Such increases, if we are to face them, will build on last year's similar increases. Indeed, last year there was an increase in my authority area of about 39 per cent., and if that continues it will represent a significant shift in police funding from central Government to the council tax payer. I was going to make the point later, but I shall make it now: that, of course, may all be part of the Government's conspiracy to increase taxes without it being so obviousthe stealth taxation to which my hon. Friend the Member for Christchurch (Mr. Chope) referred.
	There is a more serious point. The Office of the Deputy Prime Minister's local government department is carrying out a study of the funding balance in local services between locally and centrally raised moneys. I would be grateful if the Minister told us whether police funding is included in the study, which is clearly relevant to police force funding.
	My hon. Friend the Member for Spelthorne also referred to the problem of recruitment around London, as did one or two other Members and the Minister. A few weeks ago, I was encouraged to discover that the Minister himself has been involved in talks aimed at resolving it, and I can say only that I hope he succeeds. It is a serious issue, and to underplay it at any time or to pretend that it can be resolved only locally would be a mistake. In that context, I am pleased that he is taking an interest in trying to find a solution that is acceptable not just to all the police authorities around or close to London, but to the Met, which could suddenly find itself disadvantaged by the very changes he advocates.
	My hon. Friend mentioned the business of the transition, to which I also referred, as to whether the floors and ceilings are to be phased out and whether police authorities will have to comply with the new formula. I hope that the Minister responds on that. My constituency neighbour, my hon. Friend the Member for South Cambridgeshire (Mr. Lansley), made the critical point, which no one else had made, that April's national insurance contributions rise will hit the police force, and hit it hard. There is no reference in any document that I have seen to the Home Office paying any regard to that in its decisions on totality of support.
	My hon. Friend the Member for Eastbourne (Mr. Waterson) referred to the perversityI can put it no differentlyof a Minister complaining about an apparently low precept as if there was something wrong with levying a low precept. That reminds me of my district council. When the Liberals took control, they decided as a matter of policy to raise council tax to the average of that of all other districts. Regardless of whether that was necessary or wise, they thought that they should raise the council tax. It is a perverse approach to managing public moneys.
	It is clear that council tax payers across the country now face another series of rises in police precepts far in excess of inflation. Few of the increases will be in single figuresalmost all will be 10 per cent. or more, and many will exceed 20 per cent. That represents another increase in the remorseless pressure on the council tax payer. By intent or by accident, the Government are shifting the burden on to local people, and the more that burden is shifted, the more local people will demand of what they believe they are paying for.
	As my hon. Friend the Member for South Cambridgeshire said, people who live in rural areas acceptprobably rightlythat it might be their lot not to get the number of police officers that they see in city centres. However, whether people live in urban areas or in rural areas, if in their council tax they pay more and more towards the police, they will expect to see more for the money. They will expect to see more police officers on the beat. They will expect a police officer to appear on their doorstep if they phone to say that they have been the victim of crime; they will not expect merely to be given an incident number over the phone, as is sadly commonplace now.
	That is the realitythat is what will happen as a result of the Government's changes, and as it happens, so the Government as its architects will become ever more unpopular. That prospect pleases me no end, but it does not mean that the Government's approach is right. It is clear to me that the public are beginning to lose confidence in the quality of their policing. The problem extends way beyond the issue of money, but the more the public are asked to pay for their policing, the more they will expect to get in return. So far, we have seen little to suggest that the Government are able to deliver something meaningful to the people on the groundmore visible policing, better rates of detection, and increased general acceptance by the large numbers of people to whom the sight of a police officer is a rare event.
	I cannot support a set of proposals that shift the burden so far on to the local taxpayer while retaining ever more to the centre for central command and control. That is why the Opposition will oppose the motion.

John Denham: Let me deal first with several themes that have run through the debate. Then, if I can, I will reply to more detailed points made by individual hon. Members.
	As the hon. Member for Brecon and Radnorshire (Mr. Williams) said, what I will call the Welsh theme has been a feature of the debate. Let me make it perfectly clear that there is no substance to the suggestion that Welsh forces have been disadvantaged by the grant settlement. The formula approach has applied to those forces in exactly the same way as it has applied to English forces. The only difference is that, as I announced before Christmas, additional funds of slightly more than 5 million were found to top up two Welsh forces that would otherwise have fallen below the floor. We will have to discuss these points with those who feel that Welsh forces have been disadvantaged in some way.
	There is a complexity in that in Wales the local government element of the police settlement is paid by the National Assembly for Wales, whereas in England it is paid from the Office of the Deputy Prime Minister. Therefore, while in England the effect of having the crime fighting fund and so on top-sliced is seen in the English local government rate support mechanism, in Wales it is seen in the National Assembly funds. As I have acknowledged and discussed with Edwina Hart, the Minister for Finance, Local Government and Communities in the National Assembly for Wales, that arrangement leads to a lack of transparency in the system. I am certain that there has been no disadvantage to Welsh forces' finances as a result, but in the coming year we can work in partnership with the Assembly to ensure that the system is as transparent as possible.
	The hon. Member for Brecon and Radnorshire strongly suggested that at a time when we are dealing not only with street crime and antisocial behaviour, but with organised crime, drug trafficking and terrorismseveral Welsh forces play a key role in that respectwe should not be complicating lines of co-operation and accountability, and I agree. On financial issues, we need to ensure that the system is transparent and clear to everyone.
	The second theme that ran through the debate, which was dealt with by a number of hon. Members and on which the hon. Member for South-East Cambridgeshire (Mr. Paice) ended his remarks, was the twin theme of accountability to local communities and the balance between ring-fenced funds and the money that goes out in top-sliced funds. The hon. Gentleman talked earlier about a 20 per cent. increase in central funds, but he acknowledged, as did the hon. Member for Somerton and Frome (Mr. Heath), that some items require central funding, which has undoubtedly increased during the past few years.
	Just two years ago, funding for the National Crime Squad and the National Criminal Intelligence Service was top-sliced from the grants made to police authorities. The police authority grant was bigger, but we raided it a few weeks later for those two key organisations. We fund them much more honestly now through direct grant. The proportion of central grant paid by the centre looks bigger, but it is simply a better way to fund such bodies.
	The important expansion of the DNA database is also centrally funded, and I would justify central funding of the Airwave procurement programme, although not everyone would. It is to our advantage to have a single integrated radio communication system for all our police forces, because the net result of 43 separate procurements would have been to continue what we have always had in the pastpolice forces and police officers who cannot talk to each other. We have done that through central funding and that has been the right thing to do. But it undoubtedly enables people to say rather glibly that all the decisions are being taken at the centre. Decisions such as the one on Airwave and others were taken in conjunction with the police service. That was the best way to deliver those services.
	On the particular issue of the crime fighting fund, I believe that we have taken the right approach. As I said earlier, the aggregate effect of a lot of individual force decisions was to leave the number of police officers in England and Wales falling, and that was a bad thing. We could not reverse that immediately when we took office, and my hon. Friend the Member for Pudsey (Mr. Truswell) referred to that in his speech.
	However, we can today commit to a growth in cash terms in police spending not just this year but of at least 4 per cent. next year and at least 4 per cent. the year after. Our ability to do that was based on the difficult decisions that we took to sort out public finances during our first two years in office. In the long term, the stability that forces will have to plan will be worth those difficult times. Therefore, we have done the right thing both in terms of resources and in having a central crime fighting fund.
	The hon. Member for South-East Cambridgeshire made an important point. I think that, irrespective of what happens to precepts, local communities will demand greater accountability for their police service. That is why we are doing the right thing, with the police service, in making public an increasing amount of information on the whole range of police performanceeffectiveness in tackling and reducing crime, visibility, public reassurance and helping the public role of the police service as well as its economy and efficiency. During the next two or three years, through the police performance assessment framework that we are about to introduce, more and more of that information will be available. I hope that that will also enable the debate to focus on what is being achieved by the local police service.
	In many ways, we are all at one in this Chamber in that we all want more police officers and we all want them to be more visible. But we should not just be debating the inputs into the police servicehow many of this and how many of thatwe need to focus on the quality of the service to local communities. That is what we seek to provide information on, I hope in a way that makes sense not just at force level but at command unit level, because that is where people see their policing activities take place.
	The hon. Member for Somerton and Frome (Mr. Heath), said that there is no objective basis to the formula, although he implicitly acknowledged that the Liberal Democrats have not put forward alternative proposals. There is an objective basis, but we do not use crime rates, and I shall explain why by responding to a point made by my hon. Friend the Member for Caerphilly (Mr. David). He said that we need to take account of the type of crime, such as drug-related crime, that takes place in Gwent, but we also need to reward success.
	Our dilemma stems from the fact that if we gave out the main grant according to crime rates, we might be giving money to the areas with the greatest problems or we might be giving it to the worst police forces. We might take money away from a force not because the area had low crime but because the force was very good at detecting crime and convicting people. We therefore use surrogate indicators, which are meant to give a measure of the underlying policing challenges in an area. We are always open to suggested improvements in that approach, but I have not yet heard a proposal for a better approach.
	My hon. Friend asked about security costs. Each year a number of forces face increased security costs for one reason or another. The normal pattern, which we intend to follow with Gwent, is to include those costs in the calculation of the formula the following year. It is not always possible to make last minute adjustments. If there has been a change of the sort suggested by my hon. Friend, next year's grant will give us an opportunity to address that.
	I was left unclear as to whether the hon. Member for Christchurch (Mr. Chope) was advocating the return of the crime fighting money. No doubt his colleagues from Dorset will continue to press that matter with him.
	My hon. Friend the Member for Gedling (Vernon Coaker) and other Members spoke about the operational presence of police officers. My hon. Friend will be aware that under the public service agreement that the Home Office has as part of the spending settlement we are under an obligation to improve the availability of police officers for front-line policing. This week we have been discussing with the police service the best way of measuring that. It is important that, as we bear down on bureaucracy and cut red tape, the public can see how that is being translated into effective front-line policing. I add the caveat that a police officer who is investigating internet paedophilia is, in my view, a front-line officer doing a vital investigative job. Measuring front-line policing is not simply a matter of counting the yellow jackets on the streets, but we do need to show what we are doing.
	The hon. Member for South-East Cambridgeshire asked about the case and custody programme. We hope and intend to complete the roll-out of that across all 43 forces during the period of the current spending review, which begins in April and runs for three years. We will shortly publish our overall plans for IT investment.
	This has been a useful debate. Like all such debates, it has been attended by those who feel hard done by rather than by those who feel that they have done well. Against the current rate of inflation, a 6.2 per cent. real increase in police resources is a good one, and I hope that the House will recognise that.

Question put:
	The House divided: Ayes 345, Noes 197.

Question accordingly agreed to.
	Resolved,
	That the Police Grant Report (England and Wales) 200304, a copy of which was laid before this House on 3rd February 2003, be approved.

Local Government Finance

[Relevant document: The First Report from the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Committee, HC 1641, on Local Government Finance: Formula Grant Distribution.]

Nick Raynsford: I beg to move,
	That the Local Government Finance (England) Report 200304, a copy of which was laid before this House on 3rd February, be approved.

Madam Deputy Speaker: With this it will be convenient to discuss the following motion:
	That the Local Government Finance (England) Grant Report 200102: Amending Report 2003, a copy of which was laid before this House on 3rd February, be approved.

Nick Raynsford: I should like to draw Members' attention at the outset to a typographical error in annexe F, on page 83 of the report. A number of scaling factors are shown in that annexe, but the one for debt charges, which appears about two thirds of the way down the column, should read 0.96345941120985. I should add that that amendment has no effect whatsoever on the grant distribution to any local authority, as the calculations in section 3 of the report are fully consistent with the value that I have just given to the House, as are all the grant figures provided in the supporting documentation. I apologise for bringing this error to Members' attention at this very late stage, but it came to light only this afternoon.

Edward Garnier: I am grateful to the Minister, whom I know to be a man of great integrity. He may like to draw the House's attention to another typographical error. It appears that Leicestershire LEA is to receive the lowest amount of central Government money per pupil of every LEA in the entire country. That is presumably a typing or a printing error, as Leicestershire should not be the bottom county, but well up the list. Can the Minister get the printers to do it again?

Nick Raynsford: That is a good try, but I have to tell the hon. and learned Gentleman that the only typographical error is the one to which I drew the House's attention. The document sets out the distribution of grants correctly. I shall come in due course to the individual issues, including education elements.

Gerry Steinberg: The Minister says that the figures are accurate. Durham county council's social services department originally received an awful settlement that was totally inadequate to meet its needs. Now, Durham county council's formula spending share for 200304 is to be set at 447.129 million, which is 0.114 million less than the provisional figure. Moreover, rate support grant has been reduced by 0.198 million. The end result is that Durham county council has lost 0.198 million just like that. Will the Minister tell us why?

Nick Raynsford: I have to tell my hon. Friend that he is incorrect. There is no loss. Durham county council has received a 6.8 per cent. increase in its grant, and most people would regard that as a very good settlement by any standards. I shall deal with individual issues in due course, but I should like to make a little progress and to talk about the principles behind the settlement.
	On 5 December, I announced to the House our provisional local government settlement, incorporating a series of proposals for changes to the way in which formula grant is distributed. The settlement that we are debating is only part of the wider picture. It is part of a sustained year-on-year increase in funding for local authorities. That sustained core funding provides the base on which councils can build better service delivery. Over the past 18 months, I have heard a good many representations about the pressures that authorities are under and the difficulty of coping with the grant increases that are available. I understand that local authorities must make difficult decisionsit has ever been thusbut I have some difficulty with the proposition that the settlement is inadequate in general or for any particular authority.

Patrick McLoughlin: Will the Minister give way?

Nick Raynsford: I shall recall a few basic facts, then give way, but it is important that the hon. Gentleman should hear those facts to start with.
	First, I am confirming the overall increase in formula grant of 5.9 per cent.more than double the rate of inflation. That is only part of the picture. The total formula grant for 200304 will be 43.9 billion, including police grant, which the House has debated. On top of that, there will be increases in specific grants. Overall, Government grant going to local government will be 51.2 billion, an increase of no less than 8 per cent.
	Secondly, that means that for the first time ever, every local authority in England will receive a grant increase that is more than inflation.
	Thirdly, that real terms increase for every council contrasts starkly with the position before 1997, when the total amount of formula grant could, and did, decrease from one year to the next. In those days, individual authorities often expected substantial cuts in grantactual cuts, not the entirely misleading and false cuts claimed by some councils in recent weeks.
	Finally, the effect of the settlement, building as it does on what the Government have achieved over the past five years, is that local government in England has benefited from a 25 per cent. real-terms increase since we came to power. That contrasts with a real-terms cut in grant of 7 per cent. over the last four years of the previous Conservative Government. If anyone asks for a single indicator of the difference that this Government have made to local government finance, those figuresa 25 per cent. increase after a 7 per cent. cutspeak volumes.
	On that note, I am happy to give way to the hon. Member for West Derbyshire (Mr. McLoughlin).

Patrick McLoughlin: When the Minister started the consultation process, he said that the Government intended to try to make the new grant formula system more understandable. Will he help me make it more understandable to my constituents? Why will the people in Tansley, part of the area covered by the Derbyshire Dales council, get an increase of 1.91 a head, when the people a mile away in Lea in Amber Valley borough will get an increase of 7.50 a head, and those who live a mile away in the opposite direction, in Ashover, will get an increase of 6.78 a head? There is some confusion about that.

Nick Raynsford: I notice that the hon. Gentleman did not mention his county council, the body responsible for social services and education. I am happy to tell the hon. Gentleman what his constituents already knowthat this Government are giving his county a 7.8 per cent. increase. It is not surprising that he did not want to mention that. All the districts in his area, including the ones that he mentioned, are getting an increase of more than 3 per cent. There will be an above-inflation increase for every person in Derbyshire, and a 7.8 per cent. increase for the county council.

Julian Brazier: Will the Minister give way?

Nick Raynsford: Yes, I am very happy to take more interventions from Opposition Members.

Julian Brazier: Does the Minister accept that, before the changes were introduced, elderly people in homes in Kent were resourced by London to an extent that was up to two and a half times as much as Kent was given to pay for them? Now, however, the settlement being given to Kent is, at 3.9 per cent., one of the lowest in the entire country. The pensioners and schoolchildren of Kent are being robbed by a settlement far below the national average.

Nick Raynsford: I hope that the hon. Gentleman will return to the real world. He may have heard the radio debate that I had last week with the leader of Kent county council, Sir Sandy Bruce-Lockhart, for whom I have great respect. The impression that Kent is being robbed is complete nonsense. Under this Government, Kent has received an average increase each year of about 5 per cent. This year the increase is slightly lower, at 4 per cent., but it is still well above inflation. In the last four years of the previous Conservative Government's period in office, Kent received grant increases of less than 2 per cent. That is the difference between a Labour Government who resource local government properly, and a Tory Government who cut local government resources in real termsand, in some cases, in actual terms.

Roger Gale: Will the Minister give way?

Nick Raynsford: I give way to another Kent MP.

Roger Gale: The Minister talks about Conservative Members not living in the real world, but he is living in fantasy land. A granny in Kent is worth one third of what a granny in Islington is worth. Our ratepayers must top up the school bill by 2.5 per cent. because the Government have short changed them. That is the reality.

Nick Raynsford: The reality is that Kent county council has 31 million more this year, as a result of this Government. I am afraid that those Opposition Members who try to pretend that night is day and that an increase in grant is a cut are the ones who are not living in the real world.

Edward Davey: If the Government are being so generous, why do figures from his Department show that assumed council tax yield for next year will go up by 9 per cent?

Nick Raynsford: The figures do not show that. The documents make assumptions for the sake of calculations. They do not imply that any assumptions are being made about council tax levels. However, if the hon. Gentleman bears with me, he will hear me explain about the adjustments that we have made, as part of the new system, to the level of council tax and the formula spending share. Assumptions have been made as part of that process, but they have no implications for the future. The hon. Gentleman's authority will receive an increase in grant of 4.9 per cent. I hope that he is grateful for that, and that the authority appreciates that it is a decent above-inflation increase and that we are putting in place an arrangement that will ensure that every authority can budget sensibly, with the confidence of floors and ceilings. They will not be subject to the huge increases or reductionsmostly reductionsthat applied during the years when the Conservatives were in power. All too often, authorities found that their budgets were cut, whereas this year, in every case, they are receiving an above-inflation increase.

Joyce Quin: I do not envy my right hon. Friend many aspects of his task. My local authority, Gateshead, hoped for great things under the new system, as for several years it had done badly under the previous one. Our settlement is the lowest in Tyne and Wear and has recently become even lower, so I need to give my electorate an explanation. Can my right hon. Friend provide one?

Nick Raynsford: My right hon. Friend visited me, on behalf of her local authority, and we discussed that matter. In the light of the representations that we received from her and her colleagues, we looked carefully at the figures. The overall increase of 4.3 per cent. for Gateshead is above inflation, even if it is not at the same level as for other north-east authorities. That is one of the consequences of a major change in the funding system, whereby the effect of a large number of different factors feeding into the final conclusion produces results that are not wholly consistent from area to area due to the weighting given to those individual factors. We have examined the figures for Gateshead closely and are satisfied that there is no mistake in the calculation, but I understand my right hon. Friend's anxieties and will be more than happy to hold further discussions with her and her colleagues in the months ahead about the impact of the new formula on her authority.

Several hon. Members: rose

Nick Raynsford: I shall give way to my hon. Friend the Member for Cambridge (Mrs. Campbell), but then I want to make some progress.

Anne Campbell: On behalf of Cambridgeshire county council, may I express our extreme gratitude to my right hon. Friend for the high increase that we received this year? At 11.5 per cent., it was one of the highest.
	Will my right hon. Friend explain clearly to the Liberal Democrat leader of Cambridge city council that a 3 per cent. increase does not represent a cut and that he was not promised 4.6 per cent., as he claims? The leader of the council seems to have translated an average increase in the 2000 spending review into a promise. Can my right hon. Friend set the matter straight?

Nick Raynsford: I am pleased to confirm that the settlement for Cambridgeshire county council is indeed a good one, as my hon. Friend says. Cambridge city council is receiving an above-inflation increase of 3 per cent., guaranteed by the floor. That is certainly not a cut and the council was certainly never promised any other figure. If the leader of the council believes that there was such a promise, he is deluding himself.
	I understand that the difficulties in Cambridge are attributable to the census, which has affected several authorities, and that representations are being made to the Office for National Statistics. If the ONS were to take a different view, we should take that into account, but while it continues to hold that the census figures are robust we have to be guided by thatas we were in the settlement.

Eric Pickles: I have given the right hon. Gentleman notice of my question. I entirely agree about the problems caused by the census. However, the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Committee recommended that in such circumstances we should be able to look at electoral registers or school rolls and check service use. The Office for National Statistics seems to be unwilling to give information and to justify the figures. Will the right hon. Gentleman tell us what representations he has made to the ONS to try to sort things out? We should base the calculations on proper statistics.

Nick Raynsford: We have discussed with the ONS not just this year's census figures but those that it provides for us otherwise, which are always the basis for settlements. When we have evidence that there might be questions about the validity of some of the data, we always ensure that they are passed to the ONS, although it is ultimately for it to reach a judgment. I know that the ONS is considering such factors. I have personally spoken to the Treasury Minister responsible for these matters and have been assured that the ONS is giving them serious consideration. As I said, while the ONS remains confident that the census figures are robust, we must apply them and there can be no question of us substituting our judgment of the appropriate figures for theirs.

Several hon. Members: rose

Nick Raynsford: I shall take one more intervention and then I must make progress.

Karen Buck: My right hon. Friend will be aware that the two boroughs in my constituency, Westminster and Kensington and Chelsea, both suffered as a result of a sharp discrepancy between the census and the previous population estimates. Does he accept that there might now be an argument that a door-to-door head count in inner-city communities is no longer the most appropriate way of measuring population and making decisions on service allocation, and that it is time to move to a more flexible and meaningful way of assessing population?

Nick Raynsford: I am not responsible for the census or the ONS and therefore cannot give my hon. Friend the assurance that she seeks. However, I can assure her that her comments will be relayed to the ONS, which as I have said, has given a lot of thought to the matter. It is right that representatives of local authorities who are concerned about the implications of the census data should continue a dialogue with the ONS.

Julian Brazier: Will the right hon. Gentleman give way?

Nick Raynsford: No, I need to make a little progress.
	The application of the floor in my hon. Friend's case has properly protected both her local authorities. Under the system operated by the Conservative party, those authorities would have suffered serious, genuine cuts in grant rather than receiving an increase of 3 per cent., which is above inflation.
	I have referred to floors and ceilings, and those have two main uses: they help to phase in the system changes, and in any year bring a degree of predictability and stability to a system under which previously there could be large swings in grant allocation from one year to the next. That continues to be generally welcomed by local government, and that is why I intend that such a damping mechanism should continue to be a feature of the grants system indefinitely.
	For 200304, I can confirm that, for authorities with education and social services responsibilities, the floor will be 3.5 per cent. and the ceiling 8 per cent. For police and fire authorities, the floor will be 3 per cent. and the ceiling 4.9 per cent. For shire districts, the floor will be 3 per cent. and the ceiling 12.5 per cent. As I have made clear, every council in England is guaranteed an above-inflation increase.

David Taylor: Will the Minister acknowledge that in the wider world the use of terms such as a floor increase and real terms suggest that a local education authority will receive an increase in grant of at least 3.5 per cent. However, when one expresses the grant in terms of grant per pupil educated in Leicestershire, for instance, where there has been substantial growth in the number of three-year-olds, one sees that the grant can fall beneath the floor into the cellar, where the increase is 2.5 per cent. or less. Is that not a possibility?

Nick Raynsford: Leicestershire is receiving a 6.6 per cent. increase in grant, which is significant. That represents very many millions of pounds. It is for local authorities to work out how they set their budgets in the light of the increases. As I said at the outset, I do not for a moment deny the pressures with which local authorities must work. It was always thus. That applies everywhere in our worldto businesses, public authorities and the Government. Hard decisions have sometimes to be taken. I once again stress that every local authority in England is receiving an above-inflation increase, and that is the first time that that has happened.
	Since 5 December, I have had the benefit of views on the provisional settlement both in writing and in meetings. The Under-Secretary of State, Office of the Deputy Prime Minister, my hon. Friend the Member for Shipley (Mr. Leslie), other ODPM Ministers and I have met 55 delegations to discuss the proposals. I have considered carefully all the points made. For the most part, I have decided to confirm the proposals that I made, with one substantive modification to the area cost adjustment, to which I shall return. In addition, as usual, the final figures reflect the more accurate data and resource totals that have become available since we published our proposals, and also data corrections to reflect errors discovered by the Office of the Deputy Prime Minister or notified to us by local authorities.
	I shall deal briefly with certain points made during consultation. On resource equalisation, our proposals to take more account of the ability of councils to raise council tax attracted a lot of comment, much of which was based on a misunderstanding of our aims. Resource equalisation is not new; it has been part of the grant distribution system for decades. Nor are our proposals radically different from what went before. Like previous arrangements, we take account of a council's ability to raise council taxour estimate of the national average band D. As under the old standard spending assessment system, we are doing just that. However, because the assumptions underpinning the old SSA had been allowed to slip behind changes in the real world, its calculations were based on an unrealistically low council tax figure. We are therefore bringing the data up to date to reflect today's realities. That is why the calculations that the hon. Member for Kingston and Surbiton (Mr. Davey) has seen are in the report.

Matthew Green: Will the Minister give way?

Nick Raynsford: No, I must make progress.
	The report, however, makes no assumption whatever about what would be an appropriate council tax increase for individual authorities. That is a matter for them to decide. We are bringing the data up to date to reflect today's realities. I should emphasise that we are not seeking to reflect individual authorities' spending decisions. That is rightly a matter for them, and it should not, and indeed does not, influence their grant entitlement.
	The new level of resource equalisation has distributional consequences, giving lesser increases to those authorities with a low formula spending share and a high council tax base, and larger increases to those with a high formula spending share and a low tax base. I make no apology for that; it is quite deliberate. It makes the system fairer.
	Greater resource equalisation means that the formula totals also increase, from the historic level that SSAs had reached to something much closer to actual average figures.

Mark Francois: The Minister has said that what he has done is quite deliberate and he makes no apology for that. The people of Essex will have heard clearly what he has just said. Our county council received the worst grant settlement of anywhere in county and many people in the county will suffer as a result. The Minister has said that that is deliberate and he has made no apology for it. The people of Essex will be very angered by what he has said.

Nick Raynsford: I am astonished that the hon. Gentleman should be angry that his county council should receive an additional 27 million. I hope that he will reflect further on what he has said. Given the increase that we are giving to every council in the countrythat did not happen when the Conservative party was in powerhe should reflect on the fact that the Government are funding local authorities and giving them a greater ability to respond to local needs.

Matthew Green: rose

Andrew Dismore: rose

Nick Raynsford: I will give way once more.

Matthew Green: Will the Minister confirm one point about resource equalisation? Before he quotes the figures back to me, I point out that Shropshire has had above inflation increases in grant and, for the first time, the formula spending share reflects some of the real costs that the SSA did not. However, the increase in the formula spending share over the previous SSA is far greater than the increase of the formula grant. The result is that the Government's figures suggest that the council tax should go up by at least 12 per cent., which is more than twice the increase in the grant level. We welcome the extra money, but will he confirm that what I have said is true?

Nick Raynsford: There are no assumptions in the system; I have just been saying that. I am surprised that the hon. Gentleman has not been listening. We are setting out a system that is designed to distribute grant fairly between authorities. There is no assumption in the system, as there was under the old SSA, about what the Government[Interruption.] No, I hope that he will listen. I have already had to say this twice, because he did not listen the first time. We are not making any assumptions about what individual authorities should spend other than in the one area of education to which I shall turn shortly. Decisions are for the authorities themselves to take. We are putting in place a fairer system to distribute grant. If he has considered what happened in the last years of the Conservative Government, he will know that Shropshire received an average increase of 2 per cent then. It has had an average increase of 5.5 per cent. in the years that we have been in government. As in virtually every other part of the country, it has received significant increases compared to what happened under the Conservative party.

Eric Pickles: rose

Andrew Dismore: rose

Nick Raynsford: I shall give way to the hon. Member for Brentwood and Ongar (Mr. Pickles).

Eric Pickles: I merely wish to tell the right hon. Gentleman that one of his colleagues has been trying to get his attention for some time.

Nick Raynsford: I am grateful for the hon. Gentleman's self-sacrificing response, and shall give way to my hon. Friend the Member for Hendon (Mr. Dismore).

Andrew Dismore: On education, schools in my constituency have been told that they will receive a passported 7.6 per cent. increase at the ceiling, without which they would get more, as school rolls are rising. At the same time, however, the amount in cash terms is 2 million less than the local authority has been told to pay. I know that my right hon. Friend has talked about the census before, but school rolls are rising. With the best will in the world, the sum passported by my education authority will be at least 2 million light.

Nick Raynsford: I shall deal with education funding in a moment, but my hon. Friend should reflect that in the last years of the Tory Government, Barnet council[Interruption.] I know that Opposition Members do not like it, but it is the truth, however unpalatable they find it, and I shall make sure that they hear it.
	Barnet only received an average grant increase of about 1 per cent., well below inflation, during the years of the Conservative Government. By contrast, under Labour, Barnet has enjoyed an average increase of about 5.5 per cent. over the past five years. This year, it received an extra 7.3 million. I accept entirely that there are important issues to do with education, and I shall come on to them in a moment.

Several hon. Members: rose

Nick Raynsford: I shall never get to education, however, if Members continue to try to intervene. I believe that most Members would like me to make a bit of progress.
	The total for formula spending sharesFSSis therefore some 4 billion higher than the total for standard spending assessments, purely because of greater resource equalisation. That does not mean that local authorities should increase their budgets by this amount. FSS figures are not spending targets, and with the exception of education, to which I shall return in a moment, they do not imply an overall Government judgment about the spending levels of individual councils. In that respect, they are quite unlike the old SSAs, which were originally designed to represent appropriate levels of spending across all council services. That was the product of an era in which the Government thought that they knew best and could dictate to councils what they should spend. We do not agree. A council's budget decisions are for it, not for us.
	Turning to education, the Government do, of course, have a long-standing interest in the increases of schools' spending from year to year, which authorities with education responsibilities will want to take into account when setting their budgets. I readily accept that that is the one exception to the principle that I have previously outlined. I understand that almost all authorities have notified the Department for Education and Skills of their proposed schools budget. A substantial majority intend to pass to schools at least the target amount suggested by the Department for Education and Skills. I know that a number of authorities have considered making representations and discussing those matters with my colleagues in the Department for Education and Skills, who have told me of their willingness to consider such representations.

Derek Foster: My right hon. Friend has received my colleagues from the county of Durham and myself very courteously. He will tell me that Durham will receive an increase in grant of 6.9 per cent, but we come to the nub of the problem in education. As the majority of the education budget is passported, there is very little flexibility for councils on other services. In the county council, the budget for social services is under great pressure, as it has had an increase of only 4.6 per cent., following two or three tight settlements in recent years. My right hon. Friend will understand the dismay and disbelief in the county of Durham at the settlement.

Nick Raynsford: I say to my right hon. Friend, as I did when I spoke to him about these matters, that the overall increase for Durham county council of 6.9 per cent. is a good settlement. I understand the pressures the county faces with regard to social services. Many other authorities face similar or different pressures in particular service areas. I am sure that Durham county council, which has a good record of meeting local needs in a cost-effective way, will do everything it can to respond very positively. I am also sure that my colleagues in the Department of Health, who have a particular interest in these matters, and whom I suspect my right hon. Friend will probably approach, if he has not already done so, will be only too happy to discuss the specific implications and working of a number of the elements in the settlement that relate specifically to social services.
	I turn now to the environmental, protective and cultural services. This too has been a controversial block. The difficulty with EPCS is that it is a complicated area, covering many services. Research showed that it was not possible to construct a meaningful formula from a bottom-up analysis of the cost of all those services. It was simply too complicated. We instead used the available evidence to inform the most appropriate choice of factors and ratings for the service area as a whole. We accepted the arguments put forward in the summer that the costs of many of the more important EPCS services, such as waste management, fall relatively evenly on councils. The new formula, therefore, has an enhanced per head allocation.

Neil Gerrard: I appreciate the points that my right hon. Friend is making about the overall level of settlement and how it compares with what we had to deal with for many years before the present Government came to power, but there are authorities facing serious problems. My own authority, Waltham Forest, as a result of the area cost adjustment, is at the floor: 3.5. per cent. Yes, it is an above-inflation increase, but the authority also has to cope with increased national insurance payments and the passporting of money to education, which means that other services face serious problems, because the money is simply not there to passport to education and avoid cuts elsewhere. It will be extremely difficult to explain to people in that borough why they are looking at a possible council tax increase of 20 per cent. at the same time as cuts of 7 million or so will be made in EPCS and social services.

Nick Raynsford: My hon. Friend recognised that there is an overall 3.5 per cent. increase for Waltham Forest. I hope that the authority will do its best to manage its affairs efficiently. The comprehensive performance assessment has suggested that there is scope for improvement. I hope that the authority will be able to work positively based on the Audit Commission's findings and with the help of our Department. We shall be more than happy to assist in this

Iain Coleman: rose

Nick Raynsford: I am trying to respond to the intervention of my hon. Friend the Member for Walthamstow (Mr. Gerrard). It will be difficult to make progress if I constantly have to deal with interventions.
	We hope that the authority will do its best. As I have said, I understand the pressures, but by no stretch of the imagination can a 3.5 per cent. increase, an above- inflation increase, be treated as a cut.

Alan Beith: rose

Nick Raynsford: I give way to the right hon. Gentleman, who has been pressing for some time.

Alan Beith: The Minister is talking about the services that district councils provide. Does he not realise that their provision is very expensive in areas which have a very sparse population and where the population multiplies many times over during the tourist season? Those are the very factors that have been either taken away or reduced in significance, leading to floor-level increases for district councils like Berwick and Alnwick in Northumberland.

Nick Raynsford: I hear what the right hon. Gentleman says, but this is the first year in which all district councils have been guaranteed an above-inflation increase. That is a step in the right direction. We have included in the formula a factor to take account of the particular problems facing small authorities, because the cost of being in business was not previously reflected. It now is. While I understand that the right hon. Gentleman is disappointed that his districts did not do better, they have at least had increases of at least 3 per cent.
	Many respondents argued for more consistency

Geoffrey Clifton-Brown: Will the Minister confirm that half the 5.9 per cent. increase is to be taken up by the imposition of national insurance contributions, pension fund payments and an above-inflation local government pay settlement?

Nick Raynsford: I am afraid that the hon. Gentleman is making rash assumptions. It is for individual authorities to decide on issues such as pay settlements. That is a matter not for the Government, but for local authorities. We take account of the pressures on local government

Geoffrey Clifton-Brown: We do not have a choice.

Nick Raynsford: The hon. Gentleman parrots that phrase, but I am afraid that he is wrong. Local authorities have a choice and they must live with the decisions that they take. We expect them to act responsibly. We do our best to look at and reflect the pressures that individual authorities face. There is an allowance for increases in national insurance, but I am afraid that his figures are wrong, as is the concept behind his question.
	Many respondents argued for more consistency across service areas in the measures of deprivation used in the formulae. There was not, however, broad agreement on which measures to use. In any case, I do not think that that would be the right course of action. If the system is to be based on the costs and pressures that authorities face, as local government has consistently said it should be, it follows that the indicators that are used should be reasonably related to the particular service that the formula is concerned with, instead of being a broad generalisation. The factors that are relevant for social services for the elderly are not the same as those that apply to education or highways maintenance.
	The more discriminating approach proposed for the area cost adjustment, which better reflects local evidence on pay costs, was broadly welcomed. Of course, those who benefited more from the old and much cruder approach argued for its retention. Set against that is the argument that the ACA should be based only on the actual pay costs of employing staff. However, I am clear that there are recruitment and retention issues that justify setting the ACA differential higher than the level that would derive from the direct costs of local authority pay alone. We have set a threshold to the ACA that explicitly recognises that many local government employees are on national pay scales.
	I have made one substantive change to my original proposals and decided that the Isle of Wight should receive the same area cost adjustment as Hampshire. I have accepted the argument that, on balance, the new earnings survey sample size for the Isle of Wight is such that its labour costs cannot be estimated with the same degree of precision as those of other more populous areas.

Phil Woolas: Where is he?

Nick Raynsford: My hon. Friend asks where the hon. Member for Isle of Wight (Mr. Turner) is. I am sorry that he is not here to hear the good news about his local authority.
	The Isle of Wight's sample size is no larger than those of other unitary, metropolitan or London boroughs that we have combined with other authorities for the purposes of the ACA in order to avoid small samples. By making the change, I believe that we are treating all authorities more consistently.

Chris Mole: I thank my right hon. Friend for giving way. In the past, we in Suffolk have had to accept a funding discrepancy of about 180,000 between a high school in south Suffolk and one in Essex. The changes that he has made to the area cost adjustment approach in spreading it out more gently outside London has gone some way to reduce that disparity. I am sure that colleagues in Suffolk and beyond will welcome that change.

Nick Raynsford: I am grateful to my hon. Friend for his entirely sensible observations. I am pleased that we have been able to assist and I am sure that he is extremely pleased with a settlement that ensures an increase of more than 6 per cent. for Suffolk county and more than 11 per cent. for Ipswich district.

Andrew Love: I thank my right hon. Friend for giving way. When Enfield's three Members of Parliament visited my right hon. Friend in a delegation, we told him that Enfield was directly affected by its being placed in east London, rather than west London, and said that that had gone down very badly locally. We also pointed out that, as a result, Enfield had received an overall increase of only slightly more than the floor level. That has left the borough in a very difficult position in managing its budgets. Even at this late stage, will he look again to see whether the Government can do something in that regard?

Nick Raynsford: I acknowledge my hon. Friend's concerns about the impact of the changes in the area cost adjustment. As I said, the authorities that benefited from the cruder previous system were obviously unhappy about the change. Following the representations that he and his hon. Friends made, I looked closely at all the factors affecting Enfield. I am afraid that I could not justify making a change simply because, looking at the evidence, there was no objective basis to justify a different allocation of authorities in the various blocks. Of course I should be happy to have further discussions with him about future years' settlements, but I am afraid that I cannot change the settlement that has been presented to the House today.
	There has been much lurid publicity in recent weeks about the claim by certain councils that I am robbing the south-east or cutting the amount of grant received by councils in the south. That is simply untrue. The whole south-east will receive an extra 255 million4.5 per cent. more grant in 200304 than in the current year. That is not a cut by any stretch of the imagination.

Julian Brazier: Will the Minister give way?

Nick Raynsford: No, I will not.
	The hon. Member for Brentwood and Ongar has been sounding off in recent weeks to the effect that I am mugging middle England. May I ask him therefore when he last came across a mugger who not only gives his victim a sum equal to the entire contents of his wallet, but adds an interest bonus of at least 3 per cent. on top? He has not encountered any mugger like that in the past; I hope that he does in the future, and his authority should be grateful for the increase that we are paying it.
	As we said in the December 2001 White Paper, we do not expect to make major changes in the formula grant system again for a timeat least not in 200405 or 200506. We will however make adjustments where necessary to incorporate the latest data, or to reflect changes in the function or funding of local authorities. This period of stability will make it easier for councils to plan ahead. I recognise that it will not be popular with those who think that their efforts are better directed at continuous attempts to change the formula in their favour, but I do not share that view. Stability and a degree of certainty are vital to enable councils to plan ahead with confidence.
	As councils now finalise their budgets, I suppose that it is only to be expected that some will seek to deflect criticism by claiming that the Government are responsible for large council tax increases. I have no doubt that we will hear exactly that refrain from the Opposition, so I pose three simple questions to Conservative Members. First, when in all their 18 years in office did they deliver a settlement that gave an above-inflation increase to every council in England? I suggest that the House will wait a very long time for an answer.
	Secondly, if the Opposition believe that the settlement is inadequate and claim that council taxes will rise unduly as a result, how much more money do they believe should have been provided by the Government on top of the 51.2 billion that we are making available? Thirdly, where would that money come from? Without an answer to those questionsagain, I suspect we will wait in vain for onetheir rhetoric and posturing will be rightly seen as just that.
	This year's grant settlement is excellent. It continues a sustained and consistent improvement in local authority funding under this Government. It removes the anomalies that undermined confidence in the old SSA system. It takes account of today's circumstances and, indeed, brings the whole process up to do date. It gives proper emphasis to the needs of deprived and disadvantaged communities. It gives an above-inflation grant increase to every council in England. In sum, it is a much fairer system, which underpins the delivery of better performance from local government in future years. I commend the settlement to the House.

Eric Pickles: The right hon. Gentleman spoke for nearly a third of the time allocated to the debate. I make no apology for saying that, and I have no complaint about it. Clearly, he was dealing with an important matter and he was his usual courteous self, but I tell the party managers that the amount of time allocated for the debate is inadequate. We have often had to return to the House to get additional time, and additional time should be allocated to something as important as the settlement, bearing in mind that it involves a change in the formula. I make no personal criticism of the Minister as I have a great deal of time for him, even though, on such occasions, he has more front than Woolworth's.
	The Minister has done a remarkable job with his homework. He has memorised his tables and each intervention contains a reassuring rebuttaleverything is okay, everything is hunky-dory and the Member of Parliament has nothing to worry about because the settlement is so magnificent. It is the memorising that is impressive and not, sadly, the content. The Minister might well have learned the periodic tables or an Esperanto primer for all the help he is in determining the value of this year's settlement.
	The Minister is right about one thing: this is a place where two worlds collide. In the one that he and his compliant friends occupy, a contented local government receives the Government's largesse with open arms and enthusiasmlet us call it planet spin. In the other world, there is loss of grant, slashed services, populations losing tens of millions of pounds and soaring council taxlet us call it planet earth.
	Let us judge the Minister by the simple test of rhetoric versus reality. Last December, he chided my hon. Friend the Member for Wealden (Mr. Hendry) for standing up for East Sussex county council. The Minister boasted of a 3.8 per cent. grant increase; the reality is that East Sussex is one of the 13 authorities, now 12, where the grant increase for all services is insufficient to meet the Government's prescribed education increase. East Sussex will lose more than 25 million on top of a loss of 8.5 million since 1997.
	During December's announcement, in response to a question from my hon. Friend the Member for South-West Devon (Mr. Streeter), the Minister said that children in Devon had benefited from the education spending increase under the Government and that Devon county council had received a good increase. According to the Local Government Association, a good increase means a funding gap next year of 800,000.

Andrew Bennett: Will the hon. Gentleman give way?

Eric Pickles: In a moment.
	Again in December, responding to a question from my hon. Friend the Member for North Thanet (Mr. Gale), the Minister claimed that Kent would also receive a good settlement. Mr. David Lewis, finance director of Kent county council, says that the settlement will have a real effect on Kent's ability to deliver services and on council tax.
	Last week, the Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Shipley (Mr. Leslie), said in answer to my right hon. Friend the Member for Fylde (Mr. Jack):
	There can be very few excuses for excessive council tax rises.
	However, his parliamentary colleague, the hon. Member for Burnley (Mr. Pike), said that Lancashire county council would have
	either to cut services or to make an unacceptably high council tax increase.

Andrew Bennett: Will the hon. Gentleman give way?

Eric Pickles: In a moment.
	Today, we heard from the hon. Member for Hendon (Mr. Dismore), who put some reasonable points to the Minister. Again, he said what a marvellous settlement this is and, to paraphrase, that the hon. Gentleman would have done much worse under the Tories, or Lloyd George or Lord Palmerston, had they been here.
	I have a contemporaneous notethis will interest the hon. Member for Hendon, I suspectof the meeting between Barnet council and the Under-Secretary:
	I have now met with Chris Leslie and David Miliband but, apart from tea and sympathy, got nothing. They all acknowledge that Barnet had received the worst settlement and have indicated that they will not use their reserve powers against us if we do not passport the total amount.
	It goes on to say something that I also regard as very interesting:
	They have also said that the 7.6 per cent. is just a formula and that the schools have misread his letter. There is no actual money.

Andrew Bennett: I have a great deal of sympathy, of course, for the point that the hon. Gentleman is making and for all those hard-pressed councils, but is he suggesting that they would all get extra money under a Conservative regime, or is he saying that all those people who have done quite well would get further cuts so that their money could be taken away for all the basket cases he is talking about?

Eric Pickles: What I am saying is that there would be a much fairer and more understandable formula, free from political interference. It would not be a case of rewarding our friends and punishing our enemies. No, it would be a fair formula.

Several hon. Members: rose

Eric Pickles: I shall give way in a moment. Let us deal with the 12 authorities that experienced the gap in education funding. The Government seem to be confused about whether the Secretary of State will exercise his powers under section 42 of the Education Act 2002 to passport the expenditure.
	I am concerned because during last week's Question Time, in reply to a question I asked, the Minister for Local Government and the Regions said that there would be a
	willingness to be flexible where there are genuine pressures.
	I think that he said something similar today. Yet a few short questions later, the Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Shipley, returned to the same old tired mantra:
	In reality, all councils, including Essex, will get a real-terms increase in grant.[Official Report, 29 January 2003; Vol. 398, c. 86369.]
	How can Essex be receiving a real-terms increase, when the increase in grant for all its services is insufficient to meet the Government's prescribed increase in education? Essex has a funding gap of 7.5 million, Kent one of 3.7 million, and Hampshire one of 3.1 million.

Paul Beresford: Will my hon. Friend revise his definition of the Minister for Local Government and the Regions from a mugger to a rogue bank manager, who gives higher-than-inflation interest on one's account, but tucks away bank charges so high that they swallow it and more?

Eric Pickles: Yes, the right hon. Gentleman hasin his professional capacity as a Minister, not in his personal capacitythe characteristics of a loan shark.
	As the Local Government Association's briefing for this debate says:
	If they were to passport the full increase through to schools, this gap and all the other pressures on local services, for example on social services or environmental management, would have to be funded from the council tax increases.
	Delegations of councillors visiting the Office of the Deputy Prime Minister have been unable to get a straight answer to the problem of the education gap. Initially, they were told blandly that the FSS was not like the SSA, and that there was no requirement to spend up to the level of the FSS. When it was politely pointed out to Ministers that the Secretary of State for Education and Skills was offering to penalise authorities that did not passport the full amount, blandness was transformed into a blank look.
	Ministers should, however, take heartthey are not the only ones who are confused. The whole Government machine is in disarray. The local government world was amazed by the performance of the Minister for School Standards at the Department for Education and Skills councillors' seminar on 29 January at Local Government House, where he appeared not to understand the impact of settlements on authorities penalised by the funding gap. Perhaps the Minister for Local Government and the Regions should tell the House what discussions he has had with the Minister for School Standardsand let me say frankly that I am not referring to the confused briefing discussion that I witnessed in the Lobby after the December statement.

Anne Campbell: I find the new formula much fairer than the old one, which was devised under the Conservative Government. I have been pondering on the fair formula that he says the Conservatives would introduce if they took office again. Will he explain which authorities would gain and which would lose under the new fair formula that he presumably has at the back of his mind?

Eric Pickles: I will go further than that. Here and now I make a pledge, to which I am prepared to be held, that we will change the formula, but we will not do so on the basis of party advantage. Furthermore, I give a clear undertaking that we will work towards a general consensus and agreement on funding. I will go even further and say that it might have been possible for the current Government to have obtained consensus on their proposals had they not chosen to adopt such a confrontational attitude. It is an opportunity missed. The reason we have a problem is that people have no confidence nowbecause of the degree of discretion, they believe the figures to be fiddled. The consensus is broken, and that is damaging to local authorities.

Several hon. Members: rose

Eric Pickles: I will give way to the hon. Member for Kingston and Surbiton (Mr. Davey), but I hope that he is not going to talk about local income tax.

Edward Davey: Does the hon. Gentleman agree that education passporting is affecting councils such as East Sussex, Kent, Cumbria and my own council of Kingston upon Thames, and that the Government are effectively forcing them to raise their council tax? If so, does he further agree that, if councillors react by putting up their council tax, they still deserve our full support?

Eric Pickles: Again, I can go further than that, because it is the knock-on effect that I am about to come to, which will have a serious effect in respect of social services.

David Taylor: Will the hon. Gentleman give way?

Eric Pickles: In a moment.
	If the Government think that it is a simple choice between Mr. Nice and Mr. Nasty, they are missing the point: choose one and the impact is on school children; choose the other and it is on care for the elderly. The Government had promised a big increase in social services funding, but that will be impossible for authorities to deliver without a substantial council tax increase or a drastic reduction in other services. In many cases, there will be a straight, stark choice between the young and the old.
	By a cruel twist of fate, the very authorities that the Government have chosen to take money from are those with the highest proportion of elderly people. Bearing in mind that we are talking about a county function and about specific districts in which there is a high proportion of elderly people, the list is not extensive, but it includes areas such as Arun, North Norfolk, West Somerset, Rother, Eastbourne, Tendring, Christchurch and East Devon, all of which will suffer from the settlement.

Nick Hawkins: To that list, my hon. Friend can add my borough of Surrey Heath, where I have a large number of retired people or people who are about to retire. When he talks of fiddled figures, will he recognise that one thing that has caused outrage is Ministers coming to the House and announcing a 3.2 per cent. increase. Independent, non-party political borough treasurers then get in touch with Members of Parliament such as me to say that that figure has been arrived at only by fiddling this year's figures, and that the actual increase is 0.8 per cent. which is more than wiped out by the increase in national insurance. My independent officers are very angry and they know who is to blamethis Minister, this Government and their fiddled figures.

Eric Pickles: My hon. Friend is absolutely right. I could not put it better myself.

Several hon. Members: rose

Eric Pickles: I give way to the hon. Member for Sheffield, Attercliffe (Mr. Betts) but then I will have to make some progress.

Clive Betts: May I bring the hon. Gentleman back to his commitment to a fairer and less party political distribution system? One of the fundamental ways in which the new system is fairer is that it seeks only to distribute grant. The hon. Gentleman may have a different view on whether it is a fair system of grant distribution, but that is all it seeks to do. Under the Conservative Government, the system also set arbitrary spending limits for every council and imposed penalties and capping to force local authorities to comply with the Government's diktat. That was a completely unfair, arbitrary political system, which is why this system, having got rid of that element, is so much fairer.

Eric Pickles: If the hon. Gentleman is applying to serve on the Conservative commission on the reform of local government I shall certainly consider it and let him know in due course.
	Make no mistake, the crisis in social care will get worse because of the settlement.
	There are concerns about the shortfall in grant for services transferred to local authoritiesfor example, for funding preserved rights.

Nick Raynsford: The hon. Gentleman is always courteous in giving way. He has just made a rather important statement. The Conservative party is apparently launching a commission to consider local government funding. When will the commission start its work, and what will be its composition? Will Lady Porter be a member?

Eric Pickles: I do not want to disappoint the right hon. Gentleman, but I am afraid that his behaviour over the last year has rather ruled him out from joining. However, one never knows. When he leaves ministerial office we may think about calling on him.
	Already there are indications that the proposed transfer of residential allowances will have a significant impact on authorities' budgets, particularly the requirement to undertake a financial assessment of all clients by 1 October 2003. The legislation on delayed discharges currently in the other place will increase burdens on local authorities and will only add to the crisis. Care for the elderly and vulnerable children will be squeezed both ways by the pressure of increased demands and the rising costs of providing services. When the Minister came to the House to give a statement in December, I made two predictions. I said that the following week the comprehensive performance assessment would be produced and that it would take away tens of millions of pounds from excellent authorities and give poor-performing authorities tens of millions as some kind of reward. That proved to be the case. All the new powers and flexibilities promised in the Local Government Bill, which is currently going through the House, will not compensate for those missing millions. It is ironic that the Government offer flexibility and freedom to high-performing councils and at the same time place them in a straitjacket by taking away that money.

Andrew Love: Will the hon. Gentleman give way?

Eric Pickles: Not for a while.
	My second prediction was that within two years we would see council tax increases of 16 per cent. Here, I am afraid, I have come horribly unstuck. It looks as though figures close to that will be achieved this year. It seems certain that, for the first time, ordinary families on ordinary salaries in ordinary homes in band D will receive council tax bills of 1,000. Throughout the counties, southern England and London there will be massive council tax rises, and London will see increases of over 20 per cent. Council tax has become the ultimate stealth tax. The Minister is right to say that we should judge the Government on council tax rises. The accountants Tenon calculate that the increases since 1997, not including any resulting from this settlement, are the equivalent of adding 2p to income tax.
	We now have a chance to consider the formula. There is nothing fair or, for that matter, radical about it. After all, there is nothing radical about pork-barrel politics: to punish one's enemies and reward one's friends is a concept as old as time.

David Taylor: rose

Matthew Green: rose

Eric Pickles: I shall give way first to the hon. Member for North-West Leicestershire (David Taylor) and then to the hon. Member for Ludlow (Matthew Green).

David Taylor: The whole House and the few hundred people scattered around TV sets will be grateful for the Conservatives' Pauline conversion and will look forward to a politics-free grant formula when the Conservatives are next in power. All the hon. Gentleman's Front-Bench colleagues may be in residential care by then. Will he confirm that the policy is a permanent and major shift from the arrangements that were so generous and friendly to authorities such as Wandsworth and Westminster and so harsh to many authorities in the midlands and the north?

Eric Pickles: I have to tell the hon. Gentleman that I am feeling pretty sprightly, and we look forward to our return to power very soon. What is so unusual about this Government taking on Conservative policies? After all, yesterday our options for the reform of the House of Lords received the closest vote, so I would not mock if I were him. The hon. Gentleman seems to think that this is the only method of allocating funds, but there are plenty of examples throughout the world of grant distribution formulas in which the political system is not involved.

Matthew Green: rose

Eric Pickles: I promised that I would give way to the hon. Gentleman. [Interruption.] No, I promised that I would.

Matthew Green: We clearly agree that some councils will be forced into high council tax rises or cuts in their services. Will he guarantee that where councils choose to increase council tax, the Conservatives will not campaign against them on that basis at the next set of local elections?

Eric Pickles: I realise now that I have given way too many times. My hon. Friends were right. I shall give way no more and conclude my remarks quickly so that my hon. Friends can make their points.
	This system has taken most of the worst features of the old system and made them vicious. One expert on local government finance put it to me:
	Isn't it a marvellous coincidence that 5 years of planning can produce a system that takes away from Conservative authorities and gives to authorities represented by Labour Cabinet Ministers?
	The Government have not spent five years carefully deliberating. They sat on their hands for four and a half years before plunging into a hectic round of What do we do next? The Select Committee noted that in its critical report on the new formula. The shires have been slaughtered at a time when the rural communities wanted the Government to reassure them that they understood and wished to help. They have received a resounding kick in the teeth.
	What have the councils done to offend the Government? Have they challenged the Government's right to govern? Absolutely not. Have they failed to co-operate with the Government's economic policies? Again, absolutely not. Some councils, such as Kent, adopted the Government's anti-poverty strategy and were making it work.
	Why are the Government punishing councils such as Kent, Dorset and West Sussex, which the Audit Commission rated as excellent authorities? They do not fit into new Labour's projects and therefore their political influence will be marginalised. The things that they hold dear will be bulldozed and built over, as we heard earlier. In the next few years, as the funds slip away, their efforts will be diverted from innovation and improvement to the survival of their services.
	The Government may hold up their hands in horror and say that the formula has unintended consequences in the shift from county to town, and that they are blind to councils' political colour. Let us put that to the test. Let us ignore the fact that all but one of the 12 councils with a deficit in their education funding are Conservative. Let us put aside the fact that Conservative authorities are losers from the formula whereas Labour authorities are gainers. Let us use the Government's figures and compare London authorities. The increase in grant for London Labour authorities is 5.6 per cent. whereas as that for Conservative authorities is 3.7 per cent. The Minister may claim that that is because of the nature of the authorities. Let us consider some comparable authorities, for example, Harrow and Enfield. They are similar, yet Harrow gets 6 per cent. and Enfield, a Conservative authority, receives 3.9 per cent. Merton and Bromley are also similar, yet Labour Merton gets 6.2 per cent. and Conservative Bromley receives 3.5 per cent. The boroughs are similar but the outcomes are different. I should be interested in convincing, rather than party political, arguments about the differences between those pairs.

Nick Raynsford: Instead of making selective comparisons, will the hon. Gentleman compare like with like? Will he compare Enfield not with Harrow, but with the adjoining borough of Waltham Forest? What are the percentage increases for both boroughs? Will he compare Bromley not with a south-west London authority, but with the adjoining borough of Croydon? If he makes fair comparisons, he will find no political bias. Does he agree that Conservative authorities such as Wokingham, Cambridgeshire and Cheshire received huge increases? Will he therefore put an end to an outrageous political slur?

Eric Pickles: I think that I have touched a raw nerve and that the right hon. Gentleman has been rumbled. The people of London understand that places such as Bromley and Merton, and Harrow and Enfield are comparable. The statistics that I cited are correct.
	The settlement fails in many ways. It is unjust and unfair. It is also politically partisan and partisan between town and country. It ignores the growing crisis in local authority pension schemes, which will require a massive injection of cash. It fails to acknowledge that councils will have to pay the national insurance jobs tax in April. It does not take account of the unfunded element of national negotiated pay bills. Above all, the Government have forgotten whose money we are considering.
	It is foolish in times of economic uncertainty to increase the tax burden on the part of the country that generates our prosperity. To hit it simultaneously with a vicious redistribution of resources is provocation. As the council bills hit the mat in April and the full impact of the Government's actions is literally brought home, Ministers should not be surprised at the growing chant of, Give us back our money.

Several hon. Members: rose

Madam Deputy Speaker: I remind Members that Mr. Speaker has imposed a 10-minute limit on Back-Bench speeches.

Iain Coleman: I promise to speak briefly, Madam Deputy Speaker. I know that many others wish to speak.
	I want to concentrate on the specific problems affecting my local authority, the London borough of Hammersmith and Fulham, as a consequence of this year's local government finance settlement. I am sure the Minister will realise that my comments should be seen in the context of a high-performing local authority with a wide reputation for providing good services for a diverse and very mobile population.
	A week after the Minister announced the details of this year's settlement, he gave details of the Audit Commission's comprehensive assessment investigation of the workings of local authorities, which he mentioned earlier. My borough emerged as one of the best performing councils in London, and was awarded excellence status. The settlement is all the more disappointing in the light of that independent assessment.
	Under the new grant distribution system, it is even more important to distinguish between movements in formula totalsknown as formula spending shareand actual grant, actual cash. In that context, the settlement contained very bad news for the people of Hammersmith and Fulham: a 10.5 per cent. increase in FSS; a 3.5 per cent. increase in cash owing to the application of the floor, without which it would admittedly have been only 2.6 per cent.; huge losses from the methodology changes, 19.9 million in cash terms; an increase from resource equalisation of 5.4 million in cash terms; and a very small increase from data changes, amounting to less than 1 million.
	If we subtract the 5.4 million increase provided by resource equalisation from the massive loss caused by the changes in methodology, we find that the council has made a net loss of 14.5 million, or 9.7 per cent., as a consequence of the revenue grant distribution. That is easily the worst of the percentage losses experienced by inner-London boroughs, although the council has just been recognised as a high performing, high-quality authority.
	Early analysis shows that Hammersmith and Fulham has done extremely badly in comparison with virtually all other London boroughs in all three of the major services blocks: education, environmental protection and cultural services, and personal social services. The only explanation seems to be that the council is considered to be less deprived relative to other boroughs, presumably because of the indicators used by the Government to determine deprivation. In other words, a number of indicators favourable to Hammersmith and Fulham have been removed from the formula, and replaced with less favourable indicators. For example, census indicators included in the previous deprivation formulasuch as the number of children living in flats, which is very high in my boroughhave been replaced by
	households where the head of the household is in semi-routine or routine occupation.
	Such an indicator, relating to the nature of the employed occupation that a head of household might have, is very bad for Hammersmith and Fulham.
	The deliberate decisionall these were deliberate decisionsto simplify the formula and, for instance, to rely on fewer deprivation indicators means that complex and multiple deprivation in boroughs like mine simply is not detected.
	Hammersmith and Fulham benefited to some extent from the resource equalisation element of the grant distribution system, which takes account of the relative tax-raising abilities of boroughs before determining the amount of cash they should receive. That benefits councils whose need is great in relation to their tax base. Hammersmith and Fulham has a high tax base, based on the value of properties and a high council tax banding, andbecause of the new formula to which I have referreda relatively low recognised level of need. In the case of many inner London boroughs, losses related to methodology have been largely compensated for by substantial gains from resource equalisation but, as I have said, that does not apply to Hammersmith and Fulham. The double whammy for the borough is the over-simplification of the formula, and other reductions in weighting applied to deprivation and density factors.
	These are obviously highly complex matters with which few residents in my constituency will wish to be bothered. However, the reality on the ground is that last week, the one remaining social services nursery in my constituency was peacefully and highly responsibly occupied by parents, in protest at its impending closure. The one remaining sports and leisure centre and swimming pool in Hammersmith and Shepherd's Bush is also now set to close. I must advise my right hon. Friend the Minister that the leader of the council informed me this morning that council tax payers in Hammersmith and Fulham face a local taxation increase of at least 12 per cent.; indeed, it could be as much as 15 per cent. At the same time, millions of pounds worth of cuts will be made in the valued and much-needed services that are often directed at some of the poorest and most vulnerable of my constituents.
	I was a councillor in Hammersmith and Fulham for many years under successive Conservative administrations, and every year we faced cuts and reductions in services. Local people, particularly council staff and committed local councillorsagain, I emphasise that it is an excellent local authoritycannot understand why we face a similar, if not worse, scenario under a Labour Government, and nor can I. That picture has emerged not because of uncontrollable data changes, but because of political decisions taken by Ministers. I urge my right hon. and hon. Friends to look again at the practical, and in my judgment disastrous, effects that this settlement will have on the people of Hammersmith and Fulham.

Edward Davey: The Minister is highly respected throughout the House[Interruption.] I believe that he is, and the Conservative Front-Bench spokesman actually said as much. The Minister wears a pained visage throughout this debate, and particularly when various Members criticise his settlement, which he seems genuinely to believe is very generous. He should be frank with the House about the fact that many councils, particularly those at the floor, are having serious difficulties as a result of this settlement, and he should realise that the many council tax payers out there who will face the consequences of this settlement will be wearing expressions rather more pained than his own.
	There are many problems with the settlement. The first problem is that it will result in the highest ever rise in council tax. The second problem is the education passporting issue, on which we have heard a lot of double-talk from Ministers. The third problem is the underlying cost pressures in respect of national insurance and the local government pay settlement, which various Members have already talked about. Fourthly, there is the effect on pensioners. In some boroughs and local authorities, pensioners face the double whammy of high council tax increases and cutbacks in care services. Finally, we need to look at the long-term implications of the settlement, which are very worrying.

Andrew Bennett: Perhaps the hon. Gentleman will answer the question that the Conservatives failed to answer. Would his party deal with the problem of the authorities at the bottom of the pile by putting more money in, or by taking money away from those that have done slightly better?

Edward Davey: As the hon. Gentleman knows, my party has a long-standing commitment to increasing funding in education. That would be achieved through the local government grant settlement, so the answer to the first part of his question is yes.
	On the passporting of education increases, the Government are completely unjoined-up. In the past five years we have heard much about how the Government intend to act in a joined-up way, but to be frank, Mars and Venus are more joined up than this Government in this settlement. The Minister said on one day that there will be a reduction in ring fencing, but on the very next, head teachers up and down the country received a letter from the Minister for School Standards saying that there will be passporting of the education settlement. Indeed, the situation was worse than that. In addition to the Minister's letter, officials wrote to councils up and down the country setting out the calculations used by the Department for Education and Skills in determining whether the block formula spending share increase is deemed as having been passported to schools. So the whole of Whitehall has been putting pressure on the passporting through of the education settlement. Indeed, the Select Committee chaired by the hon. Member for Denton and Reddish (Andrew Bennett), who has just intervened, criticised the Government on this very issue.
	So a major problem is caused by education passporting requirements, and it is hitting councils hard. There are, I think, 12 councils among those on the final list that the Government published on Monday where the total increase in the total revenue support grant is less than the education increase that the Minister for School Standards is telling councils to passport through. Those authorities are in real difficulty. The hon. Member for Brentwood and Ongar (Mr. Pickles) said that they are Conservative councils. I can tell him that a number are Liberal Democrat councils such as mine, Kingston upon Thames, and councils such as Cumbria which are run by Liberal Democrats with Conservatives.

Mark Francois: The hon. Gentleman knows that Essex is also on the list of councils that are suffering. I want to play back to him the question that he asked earlier. As he is setting out policy from his Front Bench, can he tell the House whether, if councils have to increase their council tax because of the lack of support from the Government, the Liberal Democrats will not campaign against those councils? Yes or no?

Edward Davey: We will not campaign in many areas. A lot depends on how such a council has run its affairs. Unlike Conservative Front Benchers, we believe in local democracy.
	Not only for the list of 12 councils that I mentioned but for a long list below that, the increase in education grant as a percentage is still less than what the Minister for School Standards is requiring them to passport through. I worked out that there are 51 local authorities which, if they do what the Minister requires, will have 3 million or less to spend on all their other services. That is bizarre, and it will be very difficult for many councils to do.

Matthew Green: Is not the reality that any authority that has a grant increase of less than 6 per cent. will find the settlement difficult? The education granttwo thirds of such an authority's budgetwill be passported, so the remaining services will be squeezed in areas that have a settlement of less than 6 per cent.

Edward Davey: My hon. Friend is exactly right. That is why I want to ask the Minister a question that the Local Government Association has been asking him. He will know that the chair of the LGA, Sir Jeremy Beecham, wrote to the Secretary of State for Education and Skills asking him to give a guarantee that the reserve powers recently taken by the Government to intervene on local councils if they did not passport the education spending increase through would not be used this year, especially given the special circumstances of the major grant review. The Secretary of State refused to give that assurance, and the LGA wants to know whether Ministers will now do so.

Christopher Leslie: The hon. Gentleman has clearly given a Liberal Democrat spending commitment to give more money to education. How would he ensure that that money is spent by schools without requiring a passporting arrangement?

Edward Davey: The Minister failed to answer a very basic question, which is being asked not only by Liberal Democrat Members, but by the chair of the Local Government Association, who is a Labour party member. The LGA has written to the Government, but they have failed to give an answer. Until they respond to an issue that is affecting councils all over the country, the Minister should not be asking me such questions.

Clive Betts: May I ask the hon. Gentleman a direct question in the light of the question that the hon. Member for Ludlow (Matthew Green) asked a moment ago? Would the Liberal Democrats solve the problem of councils that have a less than 6 per cent. increase owing to passporting by asking for less passporting, so that schools would get less, or by proposing that every council should get an increase of at least 7 per cent. in grant?

Edward Davey: We say that there should not be so much ring fencing or passportingthat it should be a matter of local democracy. We are asking the Government for some honesty on the issue. We want them to admit that the implication of their spending settlement is that council tax will have to go up by huge amounts if the money for schools is to be secured. I am surprised that the hon. Gentleman does not recognise that.
	I want to refer to my authority of Kingston upon Thames, whose provisional grant was 730,000 less than the education passport. Subsequent data changes meant that the final total grant settlement for Kingston council announced on Monday is 1,059,000 less than the Government are asking the council to pass on to schools. That is a huge problem, and it is shared by many councils up and down the country.
	The grant increase for non-education services in Kingston is a staggering negative 22 per cent. Many other councils, such as the one in Essex covered by the constituency of the hon. Member for Rayleigh (Mr. Francois), are in the same position. If councils are to pass through the education spending, as Ministers intend, they will have to make huge cuts in all other services, or impose a large council tax rise. The Under-Secretary failed to be honest with the House on that very significant matter.
	We have many problems with the way in which the Government have gone about the settlement, above and beyond education. They seem unable to see what is obvious to everyone elsethat there are huge cost pressures on local authorities. We have heard about them already. They include the 4 per cent. increase in local government pay, and the 1 per cent. increase in employers' national insurance contributions. That alone will cost local authorities 280 million and, as the LGA has said, the Government should have provided that money.
	Service pressures also exist. Ministers have trumpeted a rise of 6.3 per cent. for personal social services, but many of the special grants that previously existed have been taken out. Stripping out that figure leaves the rise at a level that does not even cover demand-led pressures, especially on social services for vulnerable children. Service pressures are also evident on pensions, and many London boroughs have to meet expanded requirements stemming from new waste disposal services, additional licensing duties and increases as a result of the freedom pass.
	A floor of only 3.5 per cent. does not begin to take account of such increased service pressures. The Minister has said that we should not worry, because every local authority is being given an above inflation rise, but he fails to take account of service pressures way above inflation.

Tim Loughton: I am grateful to the hon. Gentleman for giving way, but I am tempted to use his analogy and say that people on other planets should not throw meteors. He has challenged the Government to meet the 200 million cost of increased national insurance contributions, for which his party voted. He has challenged the Government about the extra costs of pensions owing to the pensions raid enacted by the Chancellor of the Exchequer, for which his party also voted. He has also asked for extra spending on education, which his party also favours. Where is the money to come from?

Edward Davey: My party, unlike the hon. Gentleman's, has always produced costed manifestos and alternative Budgets. [Laughter.] Hon. Members may laugh, but I have been involved in the painstaking research that was required. We shall listen to the hon. Gentleman when he tries to do the same. He failed to vote for the extra money for the health service, and he should be ashamed of that.
	Local government faces the pressures that I have described, and the Parliamentary Under-Secretary should acknowledge that they exist. Councils around the country will not understand that he has failed to do so.

Paul Beresford: Will the hon. Gentleman advise the Liberal Democrat group on my local council, whose members complain that the council tax will go up by too great a percentage but who at the same time want more expenditure?

Edward Davey: I do not know about the particular circumstances in the hon. Gentleman's constituency, so I cannot comment in detail. However, I should not be surprised if Liberal Democrat councillors were concerned about the way in which that local authority was being run by the Conservatives.
	My third major concern with the settlement is the Government's approach to ring fencing. A key reason why all the pressures faced by councils are so difficult to manage, and why they feed through inevitably to large council tax rises, is that the Government are insisting on so much ring fencing. It goes beyond passporting education rises; ring fencing extends across the piece.
	Ring fencing is absolutely pernicious. It takes away councils' flexibility and autonomy when it comes to managing tough settlements such as this, and it corrodes local democracy. Not unreasonably, electors cannot understand why they have council tax rises when grant rises are increasing. Part of the answer is ring fencing. One of the worst aspects of the Government's presentation of the figures is their claim that they are reducing ring fencing. They tell us that it has fallen, but in fact they reached that conclusion only by re-defining what counts as a ring-fenced grant, in a way that not only the LGA but many councils throughout the country cannot understand.
	Why has ring fencing increased from 14.7 per cent. last year to 16. 8 per cent. this year? When the Government took control in 1997, only 4.5 per cent. of total grant to local authorities was ring-fenced. By massively increasing ring fencing and failing to tackle it, the Government have made the problems of local authority financing far more difficult. That is why there have been such high council tax increases during their tenure.
	This year, I predict that average council tax rises will be the highest since the tax was introduced. That is certainly suggested by provisional figures from councils throughout the country. Given that there may be an element of scaremongering in those figures, the average increase may not reach double figures, but it could be about 9 per cent. Curiously, the Government's own figures assume exactly that amount. When I intervened to ask the Minister for Local Government and the Regions about that point, he seemed to brush it away, but the documentation gives a figure for assumed council tax yield of 18.094 billion, which is a 9 per cent. increase on the actual yield last year. By continuing to shackle local government finance through ring fencing, the Government are forcing councils to increase council tax. There should be no mistake about that.
	I am extremely worried about those council tax increases. Council tax is one of the most unfair taxes imaginable. It hits pensioners and people on low incomes. It is a Conservative tax and the Government should not continue to push it up. It has a huge impact on the elderly. Under the settlement, many elderly people will face large council tax bills, but there will be a double whammy if they live in a local authority that has a high proportion of pensioners. An examination of the revised SSA formula for care for the elderly and the effects of resource equalisation suggests that something odd is going on.
	When the figures were issued in December, spending on care for the elderly appeared to be due to rise by 273 million. At 4.8 per cent. that was not a huge increase, but it was not bad. However, when resource equalisation kicked in, the final total was a cut of 797 milliona drop of 14 per cent. Some local authorities were able to address that problem. There is a little bit of wriggle roomthey still have some controland they may be able to find resources to cope with the cut. However, authorities with a large number of pensioners will have great difficulty in doing that. That is the double whammy: a council tax rise and cutbacks in care for the most vulnerable elderly. The Government should be ashamed of that.
	My final point is that the long-term implications of the settlement are worrying. One reason why this year's settlement has been especially contentious is that it involved a major review of the underlying grant formula. I shall not rehearse the Select Committee's arguments[Interruption]it appears that hon. Members will be pleased about thatbut I want to focus on three issues that arise from the major review of the grant formula.
	The first point concerns stability. The Government said that stability would be one of the principles embedded in the grant review. They told us how wonderful they were because they had set floors and that they would not change the grant formula for the next two years. However, the problem is that the Government will not announce the floors for the next two financial years; they will not even given an indication of where the floors will be. The capacity for local authoritiesespecially those who are already strugglingto plan ahead is reduced. The Government's attitude is particularly hypocritical, because they talk about stability and long-term planning in Whitehall, yet they refuse to give councils the necessary information to achieve that at local authority level. That is a dereliction of responsibility. The Government are not following the best practice that they try to promote.
	The second issue that concerns me[Hon. Members: Second?] The second issue on the long-term point relates to data changes. There have already been significant data changes between this year's provisional and final settlements. Information from finance officers around the country is that this year has seen larger alterations in grant as a result of data changes than almost any previous settlement. If the Government have implemented a robust and more stable grant formula, how can such huge changes just to do with data occur over a relatively short period? How can local treasurers have faith in the system?
	There are practical problems at root level. Kingston alone has lost 329,000 between the provisional and final settlements. In a small authority, that is a lot of money. The Minister must remember that that causes local authorities huge difficulties over a short period. The framework of the review does not seem to be providing the stability that was promised.
	The final point on long-term issues[Interruption.] The Government recently announced that they are to review the balance of funding between local and national Government. That should have happened alongside any grant review; it would have made it far more effective. We have read the terms of reference, which are interesting and broad. I hope that the review will includeit could do so because the terms are so broadreform or, indeed, abolition of the council tax. Only by implementing a fair system of local income taxation can we restore a proper balance of funding between national and local government. In winding up the debate, the Minister should say more about the balance of funding review. We want to know when it will be set up, who will be appointed to it and by when it will report. It is an exceedingly important aspect of the subject.
	Liberal Democrats will not be able to vote for this settlement. Effectively, it imposes the largest ever council tax rise on pensioners and families across the United Kingdom. The matter has been poorly handledwhether by the Department for Education and Skills or the Office of the Deputy Prime Minister, we do not know. Suffice it to say that there is chaos in Whitehall, and that that is having an effect at root level. Ring fencing remains, and that is a stranglehold on councils, residents and local democracy. My constituents will expect me to vote against the settlement, and those of Government Members will expect them to do so as well.

Anne Campbell: I begin by reiterating that Cambridgeshire county council is very grateful for its extremely high increase of 11.5 per cent. Of that, 4 per cent. was due to recognition as an expensive area and for the first time receiving a grant under the area cost adjustment. Education has seen a 10 per cent. increase and social services a 13.1 per cent. increase. That is probably the best settlement that Cambridgeshire has ever received. I must point out that Cambridgeshire is not a Labour authority or even, thank goodness, a Liberal Democrat authority. It is Conservative controlled, which gives the lie to the Conservatives' point that all Conservative authorities have suffered a poor settlement. That is simply not true.
	Cambridgeshire is however concerned about losing 10 million as a result of the transitional arrangements. Although it should have received a 11.5 per cent. increase, owing to the damping arrangements, the ceiling has been set at 8.5 per cent. The county council has asked me to make representations to my right hon. Friend the Minister on that point. It would likesurprise, surprisethe transitional arrangements to continue for as short a time as possible.
	The leader of Liberal Democrat-controlled Cambridge city council, who my right hon. Friend has described as deludedI have to agree with thatappears to think that the Government's indicated rate of a 4.64 per cent. rise would result in every council receiving such an increase. The increase that he expected was then somehow translated in his mind to a promised increase. When he found that he was to receive only a 3 per cent. increase in grant, he described it as a savage cut. He has since been consulting council tax payers on the sort of cuts to services that the settlement will involve. I find that kind of misrepresentation quite disgraceful. It is the kind of absurd statement that makes people distrust politicians.
	I have been asked by Cambridge city council to make representations to my right hon. Friend the Minister for Local Government and the Regions. The city council would like the transitional arrangements to last as long as possible. I find it quite difficult to choose between the two councilsexcept to say that, from the point of view of council tax payers, the county council is the more important contributor to the council tax bill, and that, therefore, the county council's wish for the transitional arrangements to last as short a time as possible should be the predominant idea in my right hon. Friend's mind.
	The leader of the Liberal Democrat city council has gone further and is representing the 3 per cent. increase not as an increase but as a 1.9 million cut. It is true that Cambridge city council has had rather bad news from the Office for National Statisticsin the way that student numbers are calculated and in the way that the change in the formula has, for the first time, excluded overnight visitors. Cambridge has a large population of visitors and finds that

Edward Davey: Will the hon. Lady give way?

Anne Campbell: If the hon. Gentleman will allow me to finish my sentence, I will allow him to intervene, even though I have only 10 minutes.
	That large population of visitors is creating difficulties because they cause the city council a great deal of extra expense. That would be a valid point to make, but those difficulties do not mean that there will be a 1.9 million cut in resources.

Edward Davey: Will the hon. Lady confirm that Cambridge city council has real cost pressures4 per cent. on the wage bill and 1 per cent. on employers' national insurance contributions? Is she wishing those away, as if they were not real cost pressures?

Anne Campbell: I am aware that Cambridge city council has cost pressures. I am also aware that that is because of a mistake in the way in which the census figures were calculated in 1990. Cambridge city council found itself being overfunded rather than underfunded for many years, which is now being redressed. We have to nail the absurd notion that the city council was promised 4.64 per cent. and received only 3 per cent.
	I do not want to speak for very long but I want to say that, as far as the county council is concerned, the education settlement will mean a real improvement in Cambridgeshire schools, which have suffered from underfunding for many years. Many schools in my constituency run at a deficit, especially those in the more deprived parts of the city, which have more difficulty in attracting pupils than do the schools in the more affluent parts of the city. I know that head teachers, whom I am meeting on Friday, are very grateful indeednot only for Cambridgeshire's settlement but for the Government's insistence that that settlement is passed on in full to schools.
	I believe, too, that social services will benefit hugely from the 13.1 per cent. increase. The care of elderly people is costly in Cambridge; property is expensive; and wages are high because of high accommodation costs. Cambridgeshire has found it difficult to provide good residential accommodation for elderly people for many years, so the 13.1 per cent. increase will be extremely important in raising living standards in the city, and taking away the fear and anxiety experienced by many elderly people in my constituency.
	On the whole, therefore, I am pleased with the settlement. I acknowledge the pressures on Cambridge city council, but it does it no good whatsoever for its leader to pretend that he had been promised something which he was certainly not. That is dishonest, and does him no good among Cambridge residents.

Paul Beresford: It must be interesting for you, Mr. Speaker, as someone from north of the border to watch the squabbling south of the border. Thus it ever was, I suspect.
	This year, the credibility of the annual divvying-up of revenue support grants reached an all-time low. I have a horrid feeling, however, that the Minister will repeat his behaviour and go past that limit next year. This is the first year of the much-vaunted new fairer, clearer system but, by some incredible feat, the Government managed to fail on both counts. It took some time, but eventually the Minister admitted to the Housing, Planning, Local Government and the Regions Committee that if the system was simple, it would involve a considerable amount of rough justice. There has been plenty of rough this evening, but I am not so sure about justice. The huge diversity and variation in local needs across the country leads to considerable complexity, as the hon. Member for Hammersmith and Fulham (Mr. Coleman) made clear. Without doubt, the new system is as complex as the one that it has replaced, and I am sure that it will become more complex with every year that squabbles continue.
	For local authorities, assessment was particularly difficult this year. The data, control totals and methodology tablesDCM for shortwere not provided to the councils until midway through the consultation period. That led to exceptional difficulties, as the tables are required by councils to check the facts on their allocation. Every year, except this year, they are provided when the allocations are announced. The reason for the delay, according to the Minister, was that the tables were more complicated this year. Who would have guessed? Some councils were upset and had only half the usual period to assess changes and the reasons behind them before the deadline for consultation. Perhaps that is why the Minister saw only 50 councilshe could have seen twice as many if there had been more time.
	The old system of allocation was based on verifiable needs indicators, but this year the system is based essentially on subjective principles or, as the Minister put it to the Select Committee, the application of judgment. It would not be unreasonable to assume that the census data used would have a solid verifiable basis. However, the Select Committee noted:
	The differences between the figures projected from the 1991 Census and the results of the 2001 Census have shifted the population figures into the sphere of contention.
	In other words, they could not be relied on at all.
	Over the past few years, two things have led to an increase in local government expenditure. First, there has been an increase in central control, a trend which has continued this year. Local authorities are being told what they should spend on educationwe have heard quite a bit about that this evening. They are also being told indirectly what to spend on social services, with the Department of Health looking over their shoulder and so on. No account is taken of the fact that in London and the south-east, revenue support has increased less than the FSS. Furthermore, the proportion of allocated grantsgrants allocated by Ministershas risen dramatically this year, perhaps by 37 per cent., the Select Committee was advised. Those grants used to be known as specific grants. To get round the difficulty of the criticism from the Committee, the Government are now renaming some of them. We have specific grants, targeted grants and so on. But in effect Ministers can allocate funds where they like, to friends, setting targets and setting the responsibility of councils to meet those specifics.

Nick Raynsford: The hon. Gentleman's party never did that.

Paul Beresford: The Minister questions whether it happened under the Conservatives. He should look back at the figures. I understand that the specific grants or similar grants in Conservative days never rose above 4 per cent. The cover, according to the Minister, is that they are to meet specific needs. The reality is that they are to dictate to the local authorities. If the grant formula is as good as the Minister claims, such action should not be necessary.
	The second main trend has been the movement of funds north, predominantly to friends, but of course if friends happen to be adjacent to a Conservative council sometimes the Conservative council can benefit, as we have just heard. But effectively the south-east and London are funding those to the north.
	This year the new system exaggerates that movement, and it exaggerates it hugely. If it had not been for the floors and ceilings, the shift would have been dramatically worse, sufficient to be an outright scandal. It is on the edge of that now.
	The underlying scheme itself is a disgraceful manipulation of taxpayers' money for political ends. The result will be that for the same level of service local people in the south-east will be taxed considerably more than those in the north. The council tax under Labour is a stealth tax. Now it is not just a straight stealth tax; it is a geographic stealth tax.
	The residents of Surrey will be expected to find an extra 17 per cent.17 per cent. more from the taxpayers for county services. They are also suffering from the same issues that were raised earlier [Interruption.]

Mr. Deputy Speaker: Order. We cannot have continual interruptions from a sedentary position on either side of the House.

Paul Beresford: What the Minister ignores is the liabilities put upon those councils, and particularly upon Surrey, for FSS, passporting, which we have covered, and also the social services requirements. Just to stand still, just to meet the passporting, just to make social services safe, as legally required, they are looking at 17 per cent.
	Most of Surrey's district councils will be in a similar situation, with the possible exception of Guildford. There the Liberals will, I guess, plunder the balances, because it is an election year. Mole Valley district council, within my constituency, received a 3.1 per cent. increase, which amounted to 107,000. Again, it has a number of centrally imposed increases. I shall pick two. National insurance will cost Mole Valley 45,000 more. The increased staff costs to handle the new centrally imposed welfare reforms will add 110,000. That means that just those two changes, let alone all the other liabilities upon it, will leave the council with a 48,000 shortfall. It is a little council. It is an efficient council. But it will have to increase its council tax by 15 per cent.

Matthew Green: The hon. Gentleman and I have just completed Committee consideration of the Planning and Compulsory Purchase Bill. Does he agree that there will be an extra burden on those councils which are planning authorities, because they will have to take on extra planning staff to cope with the new statements of development principles on top of their existing work?

Paul Beresford: I completely agree. I think that the hon. Gentleman will agree with me that because we have only 10 minutes I could not spend the whole time listing all the extra burdens that all the local authorities have, although it would be a great temptation.
	One of the Government's excuses for the shift in the funds is the perceived ability to pay. That is that the people of Surrey are more able to pay than are the people of other areas in England. As for everywhere in the country, it is true that some people are more able to pay, but I do not see why they should have to pay increased taxes because of a biased formula derived from ministerial judgments. More important, though, many people in Surrey simply cannot afford to pay. This allocation is another burden on the cost of living in the south-east and it will drive away the people whom we want to attract back to the areateachers, policemen, bus drivers and shop workers. All the people whom we are trying to attract and whom the Government say that they are trying to attract will be driven out.
	I am sure that the Minister will not worry. He has dealt with the clamour made by many of the hon. Members on the Benches behind him, although a few of them have put the other side of the case this evening. This situation and the way in which allocation is carried out are complicated. The issue is difficult for the people out there who pay the bills to understand, but they are starting to learn that, on high council tax, it is the Government who are to blame.

David Clelland: I am pleased to follow the hon. Member for Mole Valley (Sir Paul Beresford). He is a fellow member of the Select Committee on the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions, but I shall not take the same entirely distorted route in criticising the report, although I have criticisms of my own that I shall point out.
	I accept that the local government settlement is, overallI deliberately insert that worda better settlement than we ever got under any Tory Government. I congratulate the Government on trying to produce a better system of local government finance and finally ending the anomalous SSA system. As the Select Committee pointed out, however, there is still some further work to do. As we said, the equality of the outcome suffered from a lack of proper preparation. We also said:
	It is unacceptable that . . . not all the relevant information was published on the day of the announcement
	and that
	local authorities have only just over a month to respond.
	That month included the Christmas period. As I shall mention later in my speech, at least one local authority is still awaiting information, even though the final settlement has now been announced.
	The Committee also pointed out:
	The Government's proposals for resource equalisation have not resolved the difference in 'gearing' between authorities.
	That is a huge anomaly for local authorities in the north, despite what we are hearing from Conservative Members who are crying out about difficulties in the south. It is the poorer areas in the north that have to pay higher council tax in order to subsidise some areas in the south. Indeed, we are now having to do that to try to depress council tax rises in Westminster because of the anomalies in the 1991 census figures.
	The report made another point that is very important for my local authority:
	The consequence of 'passporting' increases in education and social services Formula Spending Share is either to increase council tax or to reduce expenditure on other services.
	That is certainly the case in Gateshead, where the Government's view of the figure to passport to schools, 6.877 million, is greater than the council's increase in total grant from 2002036.734 million. That leaves no additional funding for all other council services, with the burden falling on council tax payers.
	There are further difficulties that are more local, but certainly affect the north-east. For example, the new formula fails to take account of the need to maintain back lanes. We have many miles of such lanes in the north, but they are ignored in the formula. They have to be surfaced and lit, which is especially important with regard to crime problems, and local authorities have to provide funding. Furthermore, such lanes generally divide long streets of Tyneside flats, but the children in flats indicator that is retained in the children's personal and social services formula does not include Tyneside flats. It usually refers to multi-storey flats. Councils such as Gateshead have a policy of not housing children in multi-storey flats for very good social reasons, but as a result, they are not included in the formula and suffer.
	The north of England, which generally comes lowest in most social and economic indices, is still one of the regions that does worst out of the settlement. We heard from some of my hon. Friends representing Durham seats about its concerns about the settlement, but I should like to concentrate the rest of my remarks on my home town and constituency. Gateshead is a beacon council that is excellent by all the standards that the Government and the Audit Commission have set down, so we were surprised and concerned to find that we received a settlement of only 4.6 per cent. In comparison, Wiltshire received a settlement of 13 per cent. Far from transferring money from the south to the north, it seems that this process has operated the other way around.
	The Minister very kindly agreed to meet my right hon. Friend the Member for Gateshead, East and Washington, West (Joyce Quin), my hon. Friend the Member for Blaydon (Mr. McWilliam) and me, and members and officers of the council. That meeting took place on 13 January, and we were told that population loss was the reason for the problem with Gateshead's settlement. I was interested to hear the Minister tell the Opposition that we should compare like with like, as it was pointed out at that meeting that the populations of the neighbouring authoritiesNewcastle and Sunderlandhad reduced by 4 and 3 per cent. respectively, yet they had received 6 and 6.2 per cent. respectively and that Gateshead's population had reduced by only 2.9 per cent., yet it had received only a 4.9 per cent. increase. So it seems obvious to us that population loss was not the reason for the lower increase in grant.
	We were then referred to the resident expert on local government financea civil servant who would tell us what was the reason. The answer was, It must be because of other factors. Well, as hon. Members can imagine, that really was not the answer that we were looking for, so we pressed the expert and asked, What other factors? We were told, It might be education. Again, that is not a satisfactory answer.
	Finally, the local authority chief officers were invited to go back to Gateshead to look up the Department's website, where they would find all the figures and be able to work out for themselves why we only got 4.6 per cent. That may be satisfactory in some people's minds, but it is not in ours: we felt that we should have been given a proper answer at the time. Following that meeting, my hon. Friends, the leader of the council and I sent letters to Ministers, but I regret to say that, to date, no reply has been received and no explanation has been given about the 4.6 per cent. increase.
	I can understand Ministers' argument that, with a complicated formula that covers the whole country, there will be winners and losers and that some people will get more than others. That is understandable, but we are entitled to an explanation as to how the increase has come about. If we had an explanation that we could understand, we might be able to accept it, however distasteful it might be, but, unfortunately, we have had no explanation.
	We now find that Gateshead's final settlement has been reduced by a further 346,000, so the increase now works out at 4.3 per centeven lower than before. It is certainly the lowest figure in Tyne and Wear. The next lowest in that area is 6 per cent., and it is certainly a lot lower than the 7.3 per cent. average for metropolitan districts. That is not acceptable.
	My right hon. Friend the Member for Gateshead, East and Washington, West intervened on the Minister's speech to ask whether he had an explanation for the settlement. I am afraid that, again, we did not get a satisfactory answer. There is still no detailed explanation for that settlement. I accept the Minister's offer of a further meetingI am sure that it will be taken upbut that is no comfort to us here and now, when we are asked to go through the Lobby to support a settlement that we find totally unsupportable. So unless a miracle happens and the Minister is able to give us a satisfactory reply in his winding-up speech, I have to say that the hon. Members who represent Gateshead will be unable to support the measure in the Lobby this evening.

Tony Baldry: Today's report marks the end of a six-month consultation by the Government on local government funding. By any yardstick, it has been an opaque consultation, obfuscated by the Government themselves. The consultation trumpeted the replacing of the standard spending assessment of grants to local authorities, with a fair funding formula, but not even post Einsteinium relativity theorem could be as difficult to work out as the formula that the Government have presented; nor can anyone say whether the new formula is fair because we have yet to see all the announcements on local authority funding. That is absurd.
	The changes affect every service provided by every local authority, yet the Government have deliberately left councillors compromised by lack of information and lack of explanation. Consider Oxfordshire. Only two things are certain. The first is that council tax will have to rise by at least 13.4 per cent., so band D homeowners in Cherwell will pay 25 more because of today's announcement. The second is that local councillors who provide the services on which so many local people depend now have absolutely no idea what the service provision will be following today's announcement.
	The imposition of the grants, ceilings, floors, and resource equalisations, which are now part of the compulsory mumbo-jumbo of local government finance settlements, has yet to be communicated to local authorities, including Oxfordshire. Lack of information creates uncertainty. Uncertainty leads to instability.
	In a letter to ODPM officials in December 2002, Oxfordshire county council explained how the proposed settlement
	is extremely complicated and it has been difficult for us to understand the implications of the proposals. Some changes interrelate, making it very difficult to understand what is causing the change in our grant. Late release of information . . . has particularly caused problems in terms of providing speedy responses both internally and to media interest.
	I would go further. The deliberate late release of information by Ministers has made it practically impossible for Oxfordshire county council and Cherwell district council to stabilise existing services. What do they decide to put out to tender if they do not know what stage their budget is at? How can they properly decide what represents best value, under the Government's own criteria, if they do not know what bit of their budget is doing what?
	In the same letter, Oxfordshire county council explained that waiting until February 2003 for the Government to make most of the remaining announcements would
	leave us very little time to set our budget.
	Yet here we are, early in February 2003, and councillors are confused. The local media are confused, and council tax payers are so confused that they find it difficult to know whom to hold to account.
	Accountability is central to democracy. Without it, democracy is undermined. Of course Ministers and certain Labour councillors are trying to spin the story that any failures are of the councils themselves, but how so? Oxfordshire county council did not draw up the terms of last summer's consultation. It did not dream up thousands of pages of incomprehensible formulae and it did not decide to drip feed local authorities with important financial information that would clearly have a domino effect on their entire provision of key public services. All those are ministerial tactics.
	I was initially encouraged when the ODPM announced a local government finance review. I suspect that last summer's consultation document was not intended to be taken to the beach for holiday reading. None the less, the consultation was important for local government and local services, as its aim was, apparently,
	new formulae that are fairer, simpler, more intelligible and more stable.
	Sounds good, but then we get to the detail.
	Buried away in the Government's document is a sentence that rather alarmingly admits that
	any system based on formulae cannot reflect all possible circumstances, so there will inevitably be an element of rough justice.
	Then there is the caveat that rough justice
	tends to be increased as formulae are made simpler.
	Council tax payers and business tax payers in Oxfordshire and elsewhere will now experience the Government's rough justice.
	I have referred to the council tax, but there will be no less an impact on business rates in Oxfordshire. Under the consultation options, it was clear that in every case business rates would have to rise by about 7 per cent. It is clear today that that will indeed happen. On that basis, it was somewhat cynical of the Government to trumpet in an earlier local government finance Green Paper that
	we said we would give local authorities limited freedom to vary the business rate in their areas.
	Under all those scenarios, it is plain that the Government will pass the buck to local authorities, which will either have to undermine local businesses with higher rates or under-resource local public services.

Ian Liddell-Grainger: Will my hon. Friend give way?

Tony Baldry: Sorry, but I am not going to give way. I have only a limited time.
	Even more staggeringly, the same Green Paper claims that the business rate is
	not intended to substitute council tax.
	Under all the projections for Oxfordshire's budget, the business rate and council tax will have to rise significantly to cover up shortfalls in Government funding. One can only infer that the Government believe that it is acceptable to use those local council tax hikes as a substitute for proper, sustained Government investment in local services.
	The business rate rise is bad news for small businesses in north Oxfordshire. The council tax rise is bad news for everyone living in Oxfordshire. We are told that the Government grant floors will delay the impact of the changes to grant in Oxfordshire, but that is not a solution and floors do not produce fairness. Delay does not enhance stability.
	Then there is the so-called resource equalisation. That term is intended to sound good, but it does not mean what it suggests. The Local Government Association explains resource allocation as
	dealing with the problem of the gap between total formulae spending and budgets . . . with a compensating increase in the assumed amount contributed from the council tax.
	Put that mouthful into practice for Oxfordshire and it sounds much less promising.
	Let us consider the last financial year for Oxfordshire county council. The current formulae dictated that it had to spend 20 million more than it was allocated. Council tax was then increased by an average of 10 per cent., as this resource equalisation suggests, but there was still an 11 million funding shortfall. In short, resource equalisation simply is not an escape route from the Government's failure properly to invest in local services. If that is what happened under 200102 conditions, how on earth would resource equalisation sustain services when council tax increased by nearly 14 per cent? It would not do so.
	I remain cautiously optimistic, however, on the area cost adjustment. Under certain scenarios, Oxfordshire county council can lessen the impact of grant losses through top-ups via the ACA. However, that is dependent on Oxfordshire county council convincing the Government that the cost of living in Oxfordshire is as high as in the rest of the south-east. I can tell Ministers that it is. The Land Registry's latest quarterly survey showed that house prices in London are rising at a slower rate than those outside the capital in the south-east region. They are still increasing in Oxfordshire.
	I am concerned that, in the past, the Government's local government finance arrangements have shown no intention of adjusting for the higher cost of living in the south-east compared with the rest of the United Kingdom. The ODPM might say that that was the reason for the review, but if that was the Government's policy, I am slightly at a loss to understand why pay for teachers, police officers and NHS staff recognises only the high cost of living in London and not the high cost of living in counties such as Oxfordshire.
	I submit that it is irresponsible of the Government to present options that might lead to massive cuts in budgets for services. Elderly care will be destabilised and youth groups put under threat, and foster carers do not know where they stand. Not a single vulnerable group that depends on the support of social services provided by counties such as Oxfordshire can feel reassured that their lives will be made more stable or secure by today's announcement. This is not a fair formula. Sadly, it will often be the most vulnerable and the weakest in our communities who will suffer as a consequence of the Government's unfairness.

Clive Betts: Listening to all the gripes and grumbles from Opposition Members, it is difficult to believe that we are in the Chamber deciding how to divide up a bigger cake, but that is what we are doing. Only a few years ago, we were not discussing how much bigger the cake was, but scrambling around to see if we could get the biggest crumbs that had fallen on the floor after the slices had been taken out of the cake. That is the fundamental difference between today and the 1990s under the Conservative Administration. Conservative Members complain that their local council has received an increase of only 3 or 3.5 per cent., but their complaint is not about the size of the increase, but about its size compared with the increases of 8 or 9 per cent. that other authorities have received. They forget that when they were in power, a 3.5 per cent. increase would have been the envy of most councils in the country, because most got increases of less than that, or even negative increases.
	The Conservative Front-Bench spokesman sayswithout breaking into a smilethat his party would introduce a fairer and less party political system. It was difficult to listen to him. When he was pressed about what that fairer and non-party political system would be, we heard not that he had a system, nor even that he had a commission searching for a system. He could not name the members of his commission, but said that at some stage he would appoint a commission, whose members could be anyone, to try to devise a system that he had already concluded would be fairer and would give more to his Back-Bench colleagues, although at whose expense he would not say. That was an incredible statement: after all the time they have spent looking, the Opposition have not even set up a mechanism to find an alternative. When we get the commission and its great works are performed, no doubt its first job will be to decide how to work a grant distribution formula within a policy of a 20 per cent. overall cut in public expenditure. It will be interesting to see how all councils can benefit and get more under such a regime.
	Then we come to the Liberal Democrats. They are nothing if not consistent. They never have a policy or say how much they would spend. They always wait for the Government to say how much more they will spend, then say that they would spend even more. Theirs is a wholly consistent approach. It is not really a policymore an abdication of policybut at least we recognise where they are coming from.
	Anyone who believed at the beginning of the process that we would somehow come up with a settlement that would determine how to distribute billions of pounds to local authorities and that anyone in the street could understand immediately on first reading was living in an unreal world. Everyone knew that whatever settlement we came up with would be relatively complicated. We wanted a system that was fairer and that could be explained more easilyI think that Ministers have been able to do thatbut we knew that it would still be complicated. There is always a trade-off between fairness and simplicity: a really simple system will contain more elements of rough justiceat least the hon. Member for Banbury (Tony Baldry) acknowledged that. Everyone recognises that a degree of fairness requires a degree of complication. Either those Opposition Members who criticised the complexity and lack of simplicity are extremely naive, or they were speaking with party political tongue in cheek.
	One of the new system's fundamental achievements is, as I said in an intervention, that it is so much fairer. Its only remit is to take the amount of money that the Government believe is appropriate to spend on local authorities and to decide how to distribute it. I accept that there can be different views about whether it achieves that fairly, and some hon. Members will feel that their authorities are not being treated as fairly as they should be, but it is fundamentally different from the previous system, which not only sought to distribute grant but had the additional objective of specifying the level of spend for every local authority as determined by the Government, and, if those authorities overspent, to bring in a system that has varied over the years to penalise or cap them. It was a system of central Government control over local councils, local democracy and local expenditure. This system does away with that and that is why it is so much fairer and more democratic, and puts life back into local democracy in Britain. I welcome that.
	I want to make one or two suggestions about certain elements of the new proposals where some difficulties remain. The Select Committee, of which I am a member, made some criticisms and it is fair that we should deal with them. I have one or two slight reservations about the area cost adjustment, but it is remarkable how few people today have slammed that. Year after year I have listened to debates in the Chamber where virtually every hon. Member has said that the system is unfair, unacceptable and must be changed. Let us at least give the Minister a little credit for going some wayI think quite a long wayto resolving that real problem, which has been fundamental to many criticisms of the system over the years.
	The census is not directly the Minister's problem, but it is not right. There are problems. Everyone can feel that instinctively. Sheffield has even lost some of the data and does not know how many forms were returned, so it cannot calculate the under-reporting. It has had to do an estimate based on other authorities. We suggested Nottingham and Leeds, but it took other authorities further afield, including Darlington, for its comparisons, and we think that it is at least 2 per cent. out on its estimates, which can mean a lot of money in terms of grant to Sheffield. There clearly are problems with the system, and we must carry on trying to solve those.
	The issue of ring fencing remains. I recognise and respect the Minister's commitment to reduce ring fencing but, with the apparent changes of definition, it is sometimes a little difficult to understand whether it is being done. I simply ask the Minister please to keep on with that. It is important if local authorities are to have that extra freedom and local democracy is to have that extra rejuvenation that I mentioned previously.
	Some difficulties clearly remain about the relationship between the Office of the Deputy Prime Minister and the Department for Education and Skills. Passporting is not totally unacceptable because the Government have made it clear that education is their priority, so getting money into schools is something that we should welcome. If the Liberal Democrats want to argue for less money to my schools in Sheffield, I am happy, as I said before, to put it on the leaflets and explain where they are coming from, because that seemed to be the end result of what they were arguing for earlier. However, I accept that there has to be a little more evidence of joined-up thinking between Departments.
	I thank the Minister for clarifying one particular issue on which the Select Committee spent quite a lot of time, and that was whether there was a requirement to passport on the increase from SSA to FSS in social services. I accept that that is a formulaic increase, which is putting more spending into the resource equalisation procedure, and it is not meant simply to be passed on. Certainly authorities could not have done that within a realistic council tax increase. It is helpful that the Minister and the Secretary of State have now made that clear, as have Health Ministers. I thank the Minister for that. I thank him even though Sheffield has had only a 4 per cent. increase for social services. We were told that there has been a switch within the social services formula from funding the elderly to funding children's services. It happens that Sheffield has a large number of elderly people and therefore loses out on that. Nevertheless, even though we were disappointed with that 4 per cent. increase, Sheffield still has a little money to begin the process of putting money into aids and adaptations, to do away with the horrific policy of the previous Liberal Democrat-controlled administration in Sheffield, whereby elderly people who could not get in and out of their bath and wanted a little financial help for a shower, were told that if they could manage a strip wash such help would not be available. That sort of policy is a throwback to the era when the last Liberal Government were in power, and we should not have such a policy in this century. A little money has been made available to begin the process of ending that arrangement, and we can welcome that.
	In the end, for all the arguments about passporting or about amounts, Sheffield will get a 6 per cent. increase. That is slightly below the metropolitan average and slightly above the national average, but it is double the inflation rate. The council tax settlement will probably result in increases of about 7 per cent., which is less than the 9 per cent. about which the Liberal Democrats were arguing. We can argue that other authorities will receive 8 or 9 per cent. extra, and Sheffield would have liked such an increase, but 6 per cent. is a good settlement and the national settlement is also good.
	I come now to the funding review. The crucial issue is giving local authorities more responsibility and more power to raise their own revenue. That is another key element for local democracy. I ask the Minister to be brave in the review. I would love it if the Government set an objective of raising locally at least 50 per cent. of the money spent by councils. Ministers say that they want the review to achieve that. I ask that it is not prescribed in its thinking. Let it take a genuine blue skies approach; let it think the unthinkable. It simply should ask, How can we raise the extra money? If we start with prescription, we will end up with a review that addresses only the margins, and that will not achieve the fundamental change in funding arrangements that I would like.

George Young: I hope that the hon. Member for Sheffield, Attercliffe (Mr. Betts) will excuse me if I do not pursue his interesting arguments, but in the time available I have one or two points of my own to make.
	I think that we have just gone past Groundhog Day, but I think that, listening to this debate, we all had the impression that we have been here before. It is absurd that in a debate of this importance some six Back Benchers get called, and I hope that in future we can have more time to debate what is a fundamental redistribution of a huge sum.
	My case against the settlement is that the Government have made it virtually impossible to deliver not the commitments that councillors have made, but those that the Government have made. They are willing the end but they have not willed the means. They have made it clear that they want to drive up the standard of public services, particularly education and social services, and I share that ambition. However, the impact of these redistributive proposals makes that impossible not only in my Hampshire constituency but in swathes of the south-east. As I said in the last debate on these matters, what the Chancellor bestoweth in his Budget, the Deputy Prime Minister taketh away in the revenue support grant settlement.
	Monday's letter, which we all received from the Minister for Local Government and the Regions, said:
	Our proposals for the funding of local authorities' revenue expenditure next year provide another significant boost to enable them to make real improvements in their services.
	He went on to say that councils should be able to do that
	while maintaining reasonable levels of council tax.
	However, to avoid cuts in services Hampshire county council, which was recently awarded top marks for efficiency, is having to increase council tax by 15 per cent.
	The Minister will say that Hampshire's grant increase is 3.7 per cent. or 23 million, but the budget increase is 8.2 per cent., or 78 million. A standstill budget would be 7 per cent., so the gap has to be met by a council tax increase of 15 per cent. Does the Minister consider that increase reasonable? It gets worse: Hampshire county council has to passport an increase of 5.9 per cent. to the schools budget, as required by the Department for Education and Skills. That is 26 million, 3 million more than the whole of the grant increase that the council gets from the Government, so that has already been swallowed up by a mandatory increase in one service, leaving minus 3 million in grant to achieve the Minister's ambition for real improvements, coupled with a reasonable increase in council tax. It is simply not believable.
	With minus 3 million in grant left, the county council has to address everything else, including the pressures on social services. Last year, because of the lack of supply, prices rose by 13 per cent., and they may go up by 10 per cent. next year. Added to that are all the other inescapable costs: the increase in national insurance contributions, increases in the landfill tax and the crazy idea of fining social services departments for bed blocking. I hope that the House of Lords, however it is composed, will defeat that Bill.
	The Minister made a plea for certainty and stability. I support that. He said that there would be no more changes in the formula. However, we are worried about the changes that have already been announced. Will he shortly announce the floors and ceilings for the year after next so that local authorities have some certainty in their forward planning?
	If the Minister hoped that the councillors of Hampshire would carry the can for the council tax increase, I have news for him. Councillor Ken Thornber, leader of the county council, ably supported by Hampshire's Members of Parliament, has led a vigorous campaign, which received extensive coverage in the local press. The Hands Off Hampshire campaign has explained what is going on to ratepayers. They have got the message that the Government believe that, in Hampshire, we are all healthy and wealthy and suitable targets for redistribution. They know that they will pay an extra 2 a week on average because the Government have switched resources.
	Of course, people in Hampshire acknowledge that other parts of the country have greater needs and fewer resources. We have no difficulty with the regional support grant reflecting that. However, we believe that what is happening is beyond what can objectively be justified and that it is driven by political imperatives. I predict that people in Hampshire will respond by ensuring that the political motives that have driven up the council tax are changed at the earliest opportunity through the ballot box.

Geoffrey Clifton-Brown: As many of my hon. Friends have said, the debate is so important, given that it involves 39.9 billion of public money directly from the Government and considerably more in council tax, that we should have more time for it in future. I urge Government business managers to ascertain whether we can hold a similar debate shortly.
	Conservative Members made excellent contributions, notably my hon. Friends the Members for Mole Valley (Sir P. Beresford) and for Banbury (Tony Baldry) and my right hon. Friend the Member for North-West Hampshire (Sir G. Young). They point to the genuine difficulties that they and other similar southern authorities experience. That is not surprising. The grant increase is 5.9 per cent., which amounts to 3.2 billion. The increase in national insurance takes up 280 million; that in pension contributions takes up 100 million; and that in the local government pay settlement above inflation takes up 490 million. A large part of the 5.9 per cent. is therefore already swallowed up by Government-imposed increases.
	The Minister said that local authorities had a choice of whether they wanted to pay the increases. How can they choose whether to pay increases in national insurance, pensions or a nationally negotiated local government pay settlement? They have no choice. The average increase in the country is only 3.86 per cent. The Secretary of State for Education and Skills tells us that we must pass on an average passported increase of 6 per cent. to education. As either the hon. Member for Kingston and Surbiton (Mr. Davey) or the hon. Member for Ludlow (Matthew Green) said, that is roughly three quarters of any local authority budget.
	It is hardly surprising that many southern authorities must make a whopping double-figure increase in their council tax to maintain services and make up the shortfall. As my right hon. Friend the Member for North-West Hampshire said, as well as the increases that the Government have imposed directly on local authorities, his authority faces an increase in landfill tax, huge increases for waste disposal and problems with the social services block. Many authorities also have a problem with the census. That leaves some southern authorities in genuine difficulty. No wonder their council tax payers will suffer a huge increase.

Ian Liddell-Grainger: I wonder whether my hon. Friend knows that west Somerset, which has the smallest district council in England, has got just over 200,000 and cannot carry out its duties. My hon. Friend is right. The chief executive is sick to death of Government intervention.

Geoffrey Clifton-Brown: One of the Government's great claims when they reviewed spending distribution for local government was that local authorities would have more discretion. Not only has the settlement been mean but the Government have exerted more control over passported increases. Local authorities therefore have less discretion over how to spend their money on other services.

Angela Watkinson: Does my hon. Friend agree that the review gave the Government an opportunity to put right historic anomalies caused by the old system? The London borough of Havering, for example, has experienced perversely low settlements for a long time, as the Minister knows. Instead of taking the opportunity to do the honourable thing, he has given Havering the lowest increase in London3.5 per cent.and made the borough's financial difficulties a hundred times worse.

Geoffrey Clifton-Brown: My hon. Friend is entirely right. I was about to say something about London authorities' increases.

Andrew Bennett: Will the hon. Gentleman give way?

Geoffrey Clifton-Brown: I will give way to the Chairman of the Select Committee shortly, but I will not give way to anyone else.
	Conservative London boroughs have benefited from a 3.72 per cent. increase on average, whereas their Labour counterparts have received 5.6 per cent. That may not seem much of a difference, but by golly, it is a big difference given the budgets with which those authorities are dealing. The Minister of State's borough, for instance, has received a 7.6 per cent. increase, while one of its closer neighbours, Richmond-upon-Thames, has received only 3.5 per cent. How can such differentials be justified? One has a strong suspicioneven if it is not based on factthat this Labour Government have treated Labour authorities in London more generously than they have treated Conservative authorities.

Andrew Bennett: I wonder whether the hon. Gentleman will exemplify this idea of meanness. Is he saying that the Conservatives are committing more money? Or are the Conservatives actually saying that they will take money from some authorities and give it to those that they think have done badly in this regard?

Geoffrey Clifton-Brown: The hon. Gentleman would have a point if his party were not imposing increases that local authorities will have to fund. If this were a real 5.9 per cent. increase, without all the tax increases imposed by the Government, we would not be whingeing so much; but when the Government impose extra duties and extra costs on local authorities, of course authorities have no alternative but to raise council tax to double figures.
	As well as all the problems I have mentioned, there are significant other problems. Members have mentioned a problem with the social services block. How can it be right to take money from the elderly and give it to children's services? Surely both are vital services, for which authorities should be fully funded. Authorities such as my ownalready mentioned by the hon. Member for Kingston and Surbitona large proportion of whose social services budget must go towards care of the elderly, will be particularly badly hit. It really is mean-spirited of the Government to start saving and penny-pinching at the expense of the elderly.
	Many Members have described increases in their areas as unacceptable. One reason why 12 authorities have got into particular difficulties is that the passported education increase is higher than the total increase. The Local Government Association is Labour-dominated. Its chairman, Sir Jeremy Beecham, has written to the Secretary of State for Education and Skills, the right hon. Member for Norwich, South (Mr. Clarke), saying that given the turbulence in funding this year the association strongly believes that new powers that a former junior education Minister had assured the House would be used only in exceptional circumstances should not be used. In his reply, the Secretary of State recognised that in some authorities the grant increase did not wholly coverI would say does not coverthe increase in school funding, but declined to give an undertaking not to use the reserve power in 200304.
	It must be wrong, in the case of any authority anywhere in the land, for the Government to insist that a certain amount must be spent on education and then not to fund it properly. The only consequence can be that authorities having to spend too much on education must cut spending on other services.
	This is redistribution of local government funds on a grand scale. Not only must we deal with resources equalisation, but couple that with the pooling of capital receipts, the moving of money from one housing revenue account to another, and the repayment of huge debts, and what we have is a redistribution from southern authorities to northern, Labour-dominated authorities. That cannot be a fair system.

Christopher Leslie: The hon. Member for Cotswold (Mr. Clifton-Brown) gets himself into a terrible muddle. I was very interested to hear that he calls this a mean settlement. That explains why he was whingeing so much. If the settlement is so mean, does he completely dissociate himself from the comments of the shadow Chief Secretary, who says that he wants to cut public expenditure by 20 per cent.? Does he not feel that such a cut would be even more mean and penny-pinching, and would inflict considerable damage on vital public services?
	It was also very interesting to hear the hon. Member for Brentwood and Ongar (Mr. Pickles) announce that he is not content with this settlement, and that the Conservative party will set up a commission to look into local government finance. I wish him luck with that commission, and we shall certainly watch that development with great interest. We will remind him of that promise next year, and see how he is progressing. Perhaps people such as Dame Shirley Porter are working on that issue.
	Many contributions were made during the debate, and I want to pick out a few from the Members who are still present. The hon. Member for Banbury (Tony Baldry) complained about the settlement for Oxfordshire county council. I should remind him that when he was a Minister during the final three years of the previous Conservative AdministrationI think that he was a MinisterOxfordshire county council received only a 2 per cent. increase, but under this Administration it has received a 6.6 per cent. increase over the past three years. I should tell the right hon. Member for North-West Hampshire (Sir George Young), who was also a Minister during the final three years of the previous Conservative Administration, that Hampshire county council received only 1 per cent., on average, during that time. Under a Labour Government, it has received 4.9 per cent., on average, over the past three years.

Richard Younger-Ross: rose

Christopher Leslie: The hon. Member for Mole Valley (Sir Paul Beresford), who was the Minister with responsibility for local government during the final three years of the previous Conservative Administration, awarded an average of only 3 per cent. under his own stewardship. However, the Labour Government have awarded 5.8 per cent., on average.

Paul Beresford: The Minister is forgetting the other side of the coin: the best value, the changes in committee structure, all the auditors and the cost in extra staff to meet all the liabilities that he and his Government are imposing on local authorities. He should balance that against it.

Christopher Leslie: To echo a phrase that was used earlier, I think that I have touched a nerve. There have been a number of changes in the settlement, in the light of the consultation.

Richard Younger-Ross: Devon county council is run by a coalition of all parties, including Labour. It estimates that the council tax rise will be 2.60 a week; otherwise, it will have to cut services. Will the Minister tell his Labour group leader and the other leaders in Devon whether they should cut services or raise the council tax by 2.60 a week?

Christopher Leslie: The hon. Gentleman's county council is receiving a grant increase of 4.2 per cent., which is way above the rate of inflation, and Teignbridge district council is receiving a 5.9 per cent. increase. I do not understand his references to excessive increases in council tax, because they just do not exist.
	The hon. Members for Brentwood and Ongar, for Mole Valley and for Cotswold alleged a north-south divide in the allocation of resources. I know from what we have heard so far that some Members from the south think that the north is getting too much, and that some Members from the north think that the south is getting too much. The truth is that there are big gains in every single region: for example, 8.4 per cent. in Conservative-controlled Wokingham unitary council; 8.5 per cent. in Tory-controlled Cambridgeshire county council; 7.1 per cent. in Bedfordshire county council; and 8 per cent. in South Gloucestershire council. I could go on.
	My hon. Friend the Member for Tyne Bridge (Mr. Clelland) expressed concern about the 4.3 per cent. settlement for Gateshead, but I should point out that there has been a 33 per cent. increase in neighbourhood renewal funding. I accept that the settlement is less than for some other metropolitan authorities, but it is not catastrophic, and I hope that he will look again at the matter.

Eric Pickles: I have listened to the Minister carefully. Would it be a fair summary to say that what he told Barnet councilthat it should not worry as no money was involvedis what he is telling the House?

Christopher Leslie: No. Every authority, including Barnet, is receiving an increase in grant above the rate of inflation, and that has not happened before.
	Many hon. Membersincluding, among others, my hon. Friends the Members for Cambridge (Mrs. Campbell) and for Hammersmith and Fulham (Mr. Coleman), and the right hon. Member for North-West Hampshirementioned floors and ceilings, which ensure that all authorities are protected. The process has been generally welcomed. Stability in the system is extremely important, and we foresee that floors and ceilings will be part of the finance settlement for the foreseeable future.
	The hon. Member for Kingston and Surbiton (Mr. Davey) asked about the ring fencing of grants. We want to move away from ring fencing, which for the coming financial year is 12.4 per cent. but which will fall below 10 per cent. in the financial year 200506.
	My hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) hit the nail on the head in his excellent speech: the settlement is giving significant increases. We are debating how to divide a bigger cake. Since taking office, the Government have raised local government funding by 25 per cent. in real terms, compared with a real-terms reduction of 7 per cent. under the Conservatives.
	My hon. Friend the Member for Sheffield, Attercliffe was right also to highlight the changes to the area cost adjustment. There has been less criticism of that matter than in previous years. The Government's approach is more sophisticated, and specifically reflects individual authorities' circumstances. The old area cost adjustment was arbitrarily confined to London and the south-east. The new area cost adjustment recognises that higher-cost areas border the south-east and exist in some of the major northern conurbations.
	Several hon. Members raised the question of funding for social services. Resources for personal social services are increasing in real terms over the next three years by 6.3 per cent., 4.5 per cent. and 6.3 per cent. That represents an average annual increase of 5.7 per cent. on a like-for-like basis. The hon. Member for Brentwood and Ongar said that the settlement amounted to robbery from the shires, but that is complete nonsense. Shire district councils have benefited from an average increase in grant of 7.4 per cent., and shire counties are getting 5.7 per cent. more, or 690 million extra in grant. We have found a way to reflect questions of rurality and sparsity in the grant formula, and that is how we have managed to secure the increases that we have made.
	Several hon. Members rightly pointed out that there is concern about the census, and how the population figures will impact on the settlement. We have discussed the matter with the Treasury. We have to use the best data available, on a nationally consistent basis. The ONS is confident about the information that it has but, if any revisions are made, we shall have to look carefully at their potential impact.
	We have listened carefully, and we have consulted at great length about this formula settlement. We believe that it is one of the most radical settlements for local government finance for a generation. The new formula spend-share approach is very different from the old standard spending assessment. We no longer tell councils what to spend. The buck has to stop with local councils, which must make their own judgments about council tax levels.
	The new formula is transparent, and based more on evidence of need. We believe in investing more and in supporting local government. The settlement grants 51 billion to local government. As I said, the Government have increased spending on local government by 25 per cent. in real terms. That contrasts with the 7 per cent. real-terms cut by the previous Conservative Administration. That is the Opposition's track record.
	The choice for the public could not be clearer. Labour believes in improving services and investing more. The Conservatives plan to cut that vital spending by 20 per cent. and damage public services. They never gave an above-inflation increase

It being six hours after the commencement of proceedings on the motion, Mr. Deputy Speaker put the Question, pursuant to Order [28 January].
	The House divided: Ayes 316, Noes 190.

Question accordingly agreed to.
	Resolved,
	That the Local Government Finance (England) Report 200304, a copy of which was laid before this House on 3rd February, be approved.
	Mr. Deputy Speaker then put the remaining Question required to be put at that hour.

LOCAL GOVERNMENT FINANCE

Resolved,
	That the Local Government Finance (England) Grant Report 200102: Amending Report 2003, a copy of which was laid before this House on 3rd February, be approved.[Mr. Caplin.]

ADJOURNMENT (FEBRUARY)

Motion made, and Question put forthwith, pursuant to Standing Order No. 25 (Periodic adjournments),
	That this House, at its rising on Thursday 13th February, do adjourn till Monday 24th February 2003.[Mr. Caplin.]
	Question agreed to.

DELEGATED LEGISLATION

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committee on Delegated Legislation),

Family Law

That the draft Child Support (Miscellaneous Amendments) Regulations 2003, which were laid before this House on 9th January, be approved.[Mr. Caplin.]
	Question agreed to.

Mr. Deputy Speaker: I propose to put together the Questions on the three proceeds of crime motions.
	Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committee on Delegated Legislation),

Proceeds of Crime

That the draft Proceeds of Crime Act 2002 (Investigations in England, Wales and Northern Ireland: Code of Practice) Order 2003, which was laid before this House on 16th January, be approved.
	That the draft Proceeds of Crime Act 2002 (Disclosure of Information) Order 2003, which was laid before this House on 16th January, be approved.
	That the draft Proceeds of Crime Act 2002 (Exemptions from Civil Recovery) Order 2003, which was laid before this House on 22nd January, be approved.[Mr. Caplin.]
	Question agreed to.

HORSE PASSPORTS

Motion made, and Question proposed, That this House do now adjourn.[Mr. Caplin.]

David Cameron: I start from the proposition that it is an essential duty of Government to try to minimise the bureaucracy that our constituents must deal with in their daily lives. I want Ministers to get out of bed every day and ask, How can I make life easier? What rule can I scrap today? The saga of horse passports would seem to suggest that today's Ministers get out of bed each day and do precisely the opposite.
	By the end of December, all horses, ponies and donkeys will have to have a passport. It is not for travelling or for sale or purchase; it is just for existing. There are no exceptions. As one newspaper put it,
	every child's pony, every happy hacker . . . every retired equine, even every donkey, mule and zebra must have a passport.
	Let us clear about where that requirement came from. European Commission decision 93/623 required registered horses born after 1998 to be accompanied by a passport when they are moved. The intention was to simplify the trade in pure-bred horses. Commission decision 2000/68 amended that decision to ensure that horses treated with certain drugs did not enter the food chain. Under that decision, all horses will require a passport setting out all medicines taken if the horse is ultimately intended for human consumption.
	The Government decided after consultation to implement the directive by introducing a compulsory system of passports for all horses, backed by fines of up to 5,000 or six months' imprisonment. Four questions need to be answered. Is a passport scheme necessary, did the Government consult properly, is their proposal on implementing the decision the right one, and have they fully understood the drawbacks of their scheme? [Hon. Members: No.] My hon. Friends pre-empt me: the answer is no to all four questions.
	The Government should have fought the scheme to a standstill in Europe. Pigs and sheep do not have passports. Cows now have passports, but they do not include any information about drugs. At the abattoir, the farmer is simply asked whether any drugs that could enter the food chain have been administered in the past six months. The same procedure could apply to horses, especially in countries such as the UK, where the overwhelming majority of horses never enter the food chainand a very good thing too. European countries such as France that eat horse flesh import much of it from countries outside the European Union. Will this bureaucratic nonsense be imposed on those countries? Of course not. The EU decision will not even serve the purpose it is intended to serve; it should have been resisted.
	Will the Minister for Rural Affairs and Urban Quality of Life pledge to prevent other such proposals? It would be ridiculous to have passports for every animal that is reared for, or may conceivably end up in, the food chain, including chickens, ducks and pigs. Farmers who are suffering under dreadful bureaucracy will want a clear answer.
	I do not believe that the Government consulted adequately. The press release from the Department for Environment, Food and Rural Affairs that announced the compulsory passport proposal said that
	it has the support of the equine industry as represented by the British Horse Industry Confederation (the BHIC). The BHIC was set up to represent the views of the equine industry to government.
	My evidence is that the situation is much more complex. I have received submissions from a large number of organisations that either oppose passports or believe that the Government have got it badly wrong, including the British Palomino Society, the Donkey Breed Society, the National Equine Welfare Council, the Pony Club, British Dressage, the Association of British Riding Schools and many others.

James Gray: I am president of the Association of British Riding Schools and a former consultant to the BHIC. The association opposes the proposal, and the BHIC, which DEFRA cites as being in favour of the proposal, is split down the middle. Two members are in favour, two against.

David Cameron: I am grateful to my hon. Friend and shall talk later about the response that the ABRS has given me.
	I cannot claim that I have conducted a consultation on the same scale as the Government or the BHIC. However, some of the bodies I have mentioned were not listed in the British Equestrian Federation consultationthat was supposed to be part of the BHIC's work. The Donkey Breed Society said that
	this has been a fait accompli and we have not received the support from DEFRA we would have liked.
	Some organisations involved in the consultation have major misgivings, as my hon. Friend the Member for North Wiltshire (Mr. Gray) said. Some of the organisations have many thousands of members. The Association of British Riding Schools, for example, represents 65,000 horses; the Pony Club has 33,000 members. That is just the organisationshow much does the ordinary owner of a horse, pony or donkey know about the plans? I conducted a telephone survey of small livery yards and riding schools in my constituency, and their answer was, Virtually nothing.
	I have a nagging doubt about the approach of the BHIC, which is focused on the top end of the industry, and works with the British Horseracing Board and the Thoroughbred Breeders Association. As my hon. Friend the Member for Mid-Sussex (Mr. Soames) knows, those organisations are vital. However, racehorse owners have always had a lot of paperwork. I am concerned about the small owners, people who own a horse for hacking, keep a mule as a pet, or have a pony for the children. The British Horse Society, attempting to justify the introduction of compulsory passports, said:
	This new step will mean that for the first time ever we shall know exactly how many horses and ponies there are in this country. This will give the BHS greater leverage with Government, both local and central.
	I simply do not believe that that is a solid justification for this sort of bureaucracy. If I were to be unkind, I would call it slightly self-serving. The ABRS said that the consultation was seriously flawed, and called the BHIC unrepresentative and undemocratic. I cannot say for certain whether it is right, but I ask the Minister what he will do to seek assurances about this matter before he goes ahead with this misguided compulsory scheme.
	My third question was whether the Government have got it right in bringing in a compulsory system. The DEFRA press release gives three justifications for the compulsory system.
	First, it says,
	it may lessen the incentive to keep poor quality horses in poor quality condition.
	I have to tell the Minister that the reverse could be the case. If owners do not obtain a passport, they may find it very difficult to get treatment from a vet, and they may find it very difficult to find someone who will take the horse at the end of its life.
	Secondly, the Government claimand this is extraordinarythat the system could help cut the over-breeding of wild ponies. I find that hard to believe. One would have thought that wild ponies would have to be exempt from compulsory passports, but apparently not. The vision of local authority inspectors chasing across Dartmoor trying to check that two mating ponies have the correct paperwork is one to which I cannot do full justiceperhaps the Minister can do so when he replies.
	Thirdly, according to the Government, having all horses registered would help the equine industry to use the breeding data to improve the quality of the British herd. All that I can say to that is Oh, please! The herd, if one can use such a phrase for such a diverse group of animals, is permanently improving anyway. The breeding of great racehorses, the saving of rare breeds and the production of great hunters have happened for decades, even centuries, without the need for wretched passports.
	In fact, the opposite could happen. The Shetland Pony Association states:
	Many of our members have been involved in breeding for many generations and see this as the final straw, bureaucracy at its worst . . . Before we know it our native UK breeds will be in dire straits and part of our heritage will be gone for ever.
	There are alternatives to a compulsory system. We should start from the proposition that the vast majority of British horses will not enter the human food chain. As the website Saddle-up puts it,
	If there is no intention for a horse to be sold for slaughter for human consumption, it does not need a passport. So why the need for universal passports?
	I ask the Minister to look again at this issue.
	Could, at the very least, the Select Committee be asked to carry out a quick inquiry, take evidence and make a recommendation?
	It may be worth considering the solution offered by the Spotted Pony Society, which I consider to be right. It suggests a simple order stating:
	No equine shall either be exported or allowed to enter the food chain unless accompanied by a passport containing the duly completed section referred to.
	That would satisfy the directive; no more, no less.

Nicholas Soames: My hon. Friend is making an extremely powerful case against this dismal proposal. Does he agree that the Government would have been far better occupied in trying to deal with the appalling conditions in which tens of thousands of horses are shipped to France for food consumption, rather than monkeying around with British horses and ponies, which are already kept to a very high standard?

David Cameron: That is absolutely right. In fact, what the Government are suggesting could make matters worse, because if we have more of these passports more horses could find themselves transported in horrible conditions right the way across Europe. That is what the Government system will make possible.
	Perhaps the Minister could tell us what progress other European countries have made in implementing the directive. I suspect that we all know the answer.
	My fourth and final question was whether the Government had fully understood all the drawbacks of the proposed compulsory system. I think that the answer again is a solid No.
	The first drawback is the cost. There are estimates that the passports will cost around 20 each, or perhaps a little more. There are estimates of 850,000 horses in the UK. So even if half already have passportsand they do notthat is around 9 million of new cost.
	The situation could be much worse. If every horse will need a vet's examination before the passport is issued, the cost could be as much as 100. Think of the small riding school or livery stable. They suffered from foot and mouth disease, because they could not go off the roads. They are desperately worried about the Hunting Bill, and now they have this.
	Mrs. Hayes has a riding stables near Lincoln. She has 16 horses. She believes that the system could cost her 1,600. That is a lot of money for a small business. Another owner of a BHS and ABRS-approved riding centre has written to me saying that
	the scheme will put an unacceptable burden on riding schools . . . the issue has been misrepresented to the Equestrian Industry, who are only now waking up to its implications.
	The Pony Club is thoroughly depressed about the measure. It wrote to me about
	the financial burden put on our members by yet another cost.
	The British Driving Association, which represents 15,000 people and 30,000 horses, makes the point that the cost of employing a vet will rise. It states:
	It will be compulsory for every single medicine . . . to be recorded in the passport . . . from wormers to simple painkillers . . . costs will inevitably rise to cover the costs of vets filling in details.

George Osborne: My hon. Friend is making an excellent speech. Does he agree that the people who are most likely to go through all the palaver and pay all the costs will be the responsible horse owners, who should not be checked on in the first place?

David Cameron: My hon. Friend is entirely right. There will be people who have owned horses for many years, but will not comply. As a result, it will be those horses that suffera point that I shall deal with at the end of my speech.
	British Dressage makes with great vigour its point about the situation in which vets will be placed. What will happen if an animal does not have a passport? The owner may feel prohibited from calling a vet, so the horse will suffer. Alternatively, the owner might go to the black market to get the drugs, so the horse could be mistreated. If a proper vet is called, he or she might feel inhibited about administering drugs that cannot be written into a passport. What happens if somebody is out riding without their passport and they have an accident? The Palomino Society asks:
	would the owner be expected to produce the passport before veterinary attention could be given?
	It goes on to say
	Surely such non treatment would be in breach of the Royal College's recommendations.
	There is also the situation that could occur at the end of a horse's life. As I said, there will be two types of passport. The first says that the equid is not for human consumption. The second, with all the drugs information, will allow the animal to enter the human food chain. What happens if the horse changes ownership? The horse with the first type of passport, which cannot possibly go to the slaughterhouse, might be dumped or let loose because the alternatives, such as incineration, can be expensive. The situation could be even worse. As one respondent to my trawling exercise said:
	There is therefore a real danger of an illegal live export trade developing.
	We do not want that to happen.
	There is much evidence that animal welfare will suffer. The Shetland Pony Society told me that many people will
	just abandon the ponies rather than face the passport cost or a possible fine. The welfare implications of this are horrendous.
	What about horses that need certain medicines, but whose owners are worried about their being entered on to the passport towards the end of those horses' lives? As the British Driving Society puts it:
	This could result in sick animals being destroyed because they cannot receive live-saving medication and elderly, retired horses denied medicines which . . . ensure them a comfortable old age.
	How will the new bureaucracy work? What steps have the Government taken to consult local authorities? After all, they will be policing the new power. Are we really going to have another new group of snoopers and inspectors? Finally, will the compulsory system be implemented fairly? The ABRS has said that it is inequitable because
	the only individuals who will be inspected on a regular basis are the licensed riding schools.
	They will be pursued by the councils.
	Some groups that back passports would support them only if the Minister agreed to go even further. The National Equine Welfare Council supports the policy only if it is
	linked to some form of permanent identification such as micro-chipping or freeze marking.
	The International League for the Protection of Horses agrees. It concludes:
	Otherwise the cost and effort to both Government and charities is probably not worth while from a horse welfare point of view.

Nicholas Soames: rose

David Cameron: I shall not give way, as I believe that I am running a little short of time.
	In conclusion, I ask the Minister to set all those drawbacks and disadvantages against the perceived benefits and ask himself whether the case is made for a compulsory system. What is the mischief? What is the problem that we are trying to overcome? In this country, there is not really a problem, because we do not eat horses, so why the extra cost? I end where I beganwith a plea about bureaucracy, regulation and this Government. My heart sank the other day when I read that the Government now have a Minister for the horseit is probably this Ministerand even an official for the horse. Indeed, I can see three of them sitting in the loose boxes. The press release announcing those appointments said:
	We will be discussing with representatives of the industry how best to ensure that the horse plays its full part in our efforts to strengthen the rural economy.
	I would say to the Minister that, frankly, the horse is doing fine without him, so please do not start regulating, bureaucratising and strangling the creature. We in this country have a vibrant economy of stables, schools, breeders, businesses and ventures. Let them thrive. We now have half as many DEFRA officials as farmers. As regulation rises, the prospects for farmers fall, so please do not go there. I ask the Minister: please, think again.

Alun Michael: I congratulate the hon. Member for Witney (Mr. Cameron) on obtaining this debate and providing the opportunity to illuminate the issue of horse passports. I cannot congratulate him quite so enthusiastically on the way in which he opened the debate; he appeared to be trying to audition for the role of pantomime dame, with a sort of childish chorus around him lead by the hon. Member for Mid-Sussex (Mr. Soames). That is the sort of jocular attempt to ridicule anything that is being done that one occasionally expects from the Europhobes on the Opposition Benches. I was particularly surprised about the criticism of the British Horse Society.

David Cameron: I hope that the amount of time that I spent listening to people involved in the industry was obvious from the amount of material that I cited, and all I ask of the Ministerhe probably cannot answer all my questions nowis that he take the issue seriously, because it will affect a lot of our constituents. I did not make any jocular reference, and I hope that he will not do so. Let us just get on with the issue.

Alun Michael: I was referring to the hon. Gentleman's manner; he did not sound very serious.

Nicholas Soames: Nonsense.

Alun Michael: I am sorry but the hon. Member for Witney should expect criticism if he introduces a debate as he did.
	The hon. Gentleman also criticised the fact that we now have a Minister for the horse and an official for the horse. The first Minister for the horse was Lord Donoughue, who has always been passionate about the place of the horse in British society, and it was a good initiative. However, when I took over the responsibility on becoming a DEFRA Minister, I found that ministerial enthusiasm was not matched by official back-up in the Department. I felt that it was important that officials should have the expertise needed to work with the industry.
	The hon. Gentleman sought to ridicule that initiative, but it was strongly welcomed by organisations such as the British Horse Society, the British Equine Federation and many others, because they realised that the Government are seeking to work with the industry to try to ensure that the possible contribution to British society and the rural economy is developed.
	The hon. Gentleman also mentioned something that I suggest needs a lot of careful thought: he said that some of the organisations that have spoken to him have proposed using microchips, rather than the passport option. The problem is that we have to meet the requirements of the European legislation, which is very specific on the nature of the passport. There is something in the microchip option, and I have some sympathy with those in the industry who have pointed in that direction. Of course, there are parts of the industry that use that technique without its being compulsory in any way, but we have to meet the requirements.
	A full consultation exercise on introducing horse passports was carried out in the summer of 2000. The main objective of the legislation is to provide assurance across Europe that horses that have been administered with medicines that have not been authorised for use in food-producing animals cannot be slaughtered for human consumption. A degree of certainty was being sought in introducing that legislation.
	In deciding how to implement the measure, the Government listened to the concerns of the equine industry and acted accordingly. Full implementation of the new legislationwhereby all horses are required to have a passport, not just those entering the human food chainreceived the support of the majority of those in the equine industry, who view it not only as a safety measure to prevent horses administered with prohibited medicines from entering the food chain, but as a way of improving the breeding and welfare of horses.
	The Government therefore announced on 14 February 2002 that all horses will have to have a passport to bring the UK in line with European legislation. We set an implementation date of 31 December 2003. Part of the reason for doing that was to give the industry full opportunity to plan and prepare for that implementation date. I emphasise the fact that the UK must comply with the legislation. This is a case not of regulation being imposed on the industry, but of the Government listening to the industry on how EU legislation should be implemented in this country.
	The Government agreed with the industry's wishes that passports should continue to be issued by the various private sector organisations, particularly the breed societies that have been issuing horse passports for years.

James Gray: Absolutely scandalous.

Alun Michael: It would be helpful if the hon. Gentleman, who is occupying the Opposition Front Bench, listened to what is being said instead of muttering in the way that he does. He has already intervened with a declaration of interest

James Gray: rose

Alun Michael: No. This is Back Benchers' time and I am responding to a debate introduced by a Back Bencher.

James Gray: Nonsense.

Mr. Deputy Speaker: Order. We should conduct the debate in a slightly more civilised way.

Alun Michael: I am grateful, Mr. Deputy Speaker. The advent of passports for all horses will create a level playing field, because all horses, not just pedigrees as at present, will have to have a passport. That will remove the perceived discrimination against registering pedigree horses. The loss of important blood lines will be threatened if those horses are not registered.

Nicholas Soames: Will the Minister give way?

Alun Michael: No. With regard to the cost of a passport, 56 organisations and associations are approved to issue horse passports, which are valid for the lifetime of the horse. With all horses requiring a passport, we believe that the average cost will come down to between 20 and 30. However, we understand that some organisations or associations may offer an even lower price for passports for horses owned by riding schools and charities.
	The legislation will be enforced, as is normal for animal health legislation, by the local authorities. Passports will be required before a horse is sold, which will also help enforcement of the measure. For horses going to be slaughtered for human and pet consumption, enforcement at the slaughterhouse will be the responsibility of the Food Standards Agency. I am pleased that a large part of the equine industry supports the need for a passport for all equines.
	In addition, since the announcement on 14 February last year, we have continued to listen to the concerns of particular sections of the industry, such as areas with semi-feral breeds, such as Dartmoor and the New Forest. I have met representatives of those concerned with the situation, and I am considering the case for special rules to apply in such areas. The issue is not simple and straightforward, which is why I have met people personally and ensured that there are meetings with my officials in order for their concerns to be taken on board.
	I am aware that, more recently, concern has been raised about how the introduction of passports will impact on abattoirs that slaughter horses for human and pet consumption. We are considering whether and how it might be possible to minimise that impact. That is a serious point. We hope to send the draft legislation out to the industry for comment very shortly.
	I am pleased that the Government are working with the industry to consider the BEF's proposals for a central horse database to be established on information supplied by the passport-issuing societies. The industry is very much in favour of that, and I met representatives personally to explore those possibilities at an early stage in introducing the legislation.
	The database is a unique example of collaboration between the equine industry and the Government. The database will help the Government, because, for the first time, there will be information on the location of horses that could be crucial in a horse disease outbreak. That would provide more knowledge of the size of the horse population in the country

Nicholas Soames: Will the Minister give way on that point?

Alun Michael: I am not sure of the normal conventions of an Adjournment debate, Mr. Deputy Speaker. I thought that I was responding to the hon. Member for Witney, who introduced the debate.

Mr. Deputy Speaker: For the Minister's clarity, may I say that it is entirely up to him to decide whether to give way to interventions, in the normal way.

Alun Michael: I am grateful to you for that clarification, Mr. Deputy Speaker. In view of that, I give way to the hon. Member for Mid-Sussex.

Nicholas Soames: Will the Minister tell me what horse disease he has in mind that could possibly require the issuing of passports to every horse and pony in the land?

Alun Michael: I said no such thing.

Nicholas Soames: Yes you did.

Alun Michael: No, I did not say any such thing. I said that the information made available though the passport system would be fed into a database, which would be of advantage both to the horse industry and in the event of horse diseases becoming a problem in this country. The hon. Gentleman should be aware that frequently diseases and problems that have not been anticipated arise in fairly short order.

David Cameron: Given that there are clearly unanswered questionsthe Minister cannot answer the question about what disease might ariseand given that I have made clear the number of bodies that are unhappy with the decision and do not feel that they were listened to, would it not be a good idea if the Select Committee were to consider the matter, to call some evidence and to have another go at examining the issue, before we produce an enormous bureaucracy that affects so many people in the country? I ask the Minister to think about it before coming back so quickly.

Alun Michael: The horse industry sought certainty about what would happen and within what time scale. We provided both certainty and a generous time scaleinformation on the way in which implementation of the European directive would be pursued has been available for more than a yearso that the industry would know where it stood and could make plans and organise. That is true of the passport-issuing authorities, of which there are more than 50, which provide the service for their memberships and for wider horse ownership. Some have been examining the potential impact on organisations and horse owners that have not until now been tied into one of the existing passport systems. As I said, the database is not a part of the implementation of the passport schemeit is a bonus. In parallel to implementation, we are trying to work with the industry to achieve a measure that is of benefit to the industry.
	Conservative Members do not appreciate it, but it is a fact that Ministers get up each day and try to make the lives of our constituents better and to work with industries, such as, in this case, the horse industry[Interruption.] I appreciate that the hon. Member for North Wiltshire, who keeps
	The motion having been made after Seven o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
	Adjourned at seventeen minutes to Nine o'clock.
	4 February 2003: in col 238, under heading HOUSE OF LORDS REFORM (NO. 5), text should read:
	Motion made,
	That this House approves Option 5 (60 per cent. appointed/40 per cent. elected) in the First Report from the Joint Committee on House of Lords Reform (HC 171).[Mr. Robin Cook].
	Question put and negatived.